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Reflation? Tell That To Bonds

US TSYS SUMMARY
Tsys traded weaker on Tue's open, gradual rebounding until Consumer Confidence, futures gapped lower after better than expected read 109.7 for March vs. 90.4 last month.
  • Tsys gradually rebounded, 30Y Bonds and Ultra-Bond futures making new session highs by noon. Couple long end block buys (+4,250 USM 154-31, buy through 154-28 post-time offer; +3,010 WNM1 182-28, buy-through 182--22 post-time offer) contributed to curves flattening while 2s-10s held lower levels after the bell.
  • No unifying driver cited for continued carry-over weakness in rates, except for a reflation narrative that helped push yields to 1+ year highs late Feb into first half of March.
  • Not market moving, Fed speak contributing to the reflation theme: Atlanta Fed Bostic: HOPEFUL THAT U.S. WILL SEE "LARGE" JOB NUMBERS IN COMING MONTHS, Bbg; and NY Fed Williams: SEES A STRONG U.S. ECONOMIC RECOVERY, Bbg. Aside, Pres Biden to deliver his "economic vision" from Pittsburg Wednesday (no set time).
  • Month/quarter-end positioning and squaring ahead Friday's March employment data generated decent volumes on two-way flow. Tsy options downside insurance highlights: over +26,000 FVM 121/122/123 put flys, 9.5-10, FVM currently trading 123-14.5; wk1 TY midcurve put flys tactical buys for strong data Friday.
  • The 2-Yr yield is up 0.6bps at 0.1465%, 5-Yr is up 1.9bps at 0.907%, 10-Yr is up 1.4bps at 1.7225%, and 30-Yr is down 1.5bps at 2.39%.
BulletMarketsFixed Income Bullets
BulletMarketsFixed Income Bullets

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