Policy Pressure Rules The Roost On Monday

A flat reopen for TYZ1, last printing -0-03 at 130-21+, after the contract finished lower on Monday.

• To recap, the belly of the curve drove the weakness witnessed across much of the space during the first session of the week, with the 5- to 7-Year sector cheapening by ~4.5bp, while 30s finished the session marginally richer. Global matters were at the fore when it came to the twist flattening of the curve, with stronger than expected NZ CPI data & hawkish weekend comments from BoE Governor Bailey noted. Fed hike expectations also weighed on the belly. In sum, this allowed the 5-/30-Year yield spread to tag the flattest levels seen since Apr '20, although that spread and the broader Tsy space managed to finish shy of intraday lows.
• On the flow side desks reported better selling in 5s to 10s from real-money and bank portfolios, in addition to tactical steepener unwinds, as well as deal-tied selling as corporate and supra-sovereign issuance picked up. Goldman Sachs issued $9bn over 5 tranches on Monday, while China held investor calls over multi-tranche snr bond issuance ($4bn exp. over 3-, 5-, 10- and 30-Year lines later this week).
• There isn't anything in the way of overt tier 1 risk events slated for Asia-Pac hours. Meanwhile, Tuesday's NY docket will be headlined by housing starts & building permits data, in addition to Fedspeak from Waller, Bostic, Barkin & Daly.