Monday's Flattening Reverses On Equity Bounce

Retracement in Treasuries on a continued bounce in equities has been the story of the overnight session Tuesday, with housing data and 20Y supply eyed ahead of Wednesday's FOMC decision.

• TY1 futures are down -0-4+ at 133.04, 10y yields up 1.8bp at 1.330% while 30y yields trade higher by 2.6bp at 1.875%. 2s10s yield curve trades steeper by 1.8bp at 111.3bp while 10s30s is steeper by 0.8bp at 54.5bp.
• The curve has bear steepened, with 5s30s retracing all of Monday's bull flattening, and 2s10s not far off.
• The two-day Fed meeting kicks off today; our preview went out Monday.
• The House is set to vote today on a bill to avert government shutdown and suspend the debt ceiling - while likely to pass in the House, Senate passage looking more difficult.
• Supply in focus today, with $24B 20Y bond re-open at 1300ET.
• Data includes housing starts / building permits alongside current account balance at 0830ET.
• NY Fed buys ~$1.225B of 7.5-30Y Tsys.