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Reversing Overnight Risk-Off Tone

US TSYS SUMMARY
Well off early London highs to below early Asia session lows by midmorning, some desks pointed to a rebound in equities after China stocks fell appr -3%. Generally muted week opener with sites on Wednesday's FOMC policy announcement.
  • Decent early volumes (TYU >600k) petered out soon after, TYU trading an additional 325k to 975k by the closing bell as rates held to a narrow range. Current 10YY 1.2846% vs. 1.2196% low; 30YY 1.9346% vs. 1.8545% low.
  • Tsy futures bounce slightly off lows, still holding narrow overall range after the $60B 2Y (91282CCN9) note draws 0.213% vs. 0.215% WI. Bid-to-cover was 2.47x, shy of the 5 month average of 2.52x. Indirect take-up climbs to 52.76% from 50.63% in June (51.85% 5M avg); direct bidder take-up of 21.26% continues to outpace the 5M avg of 16.92%; primary dealer take-up recedes to 25.98% vs. 5-month average of 31.23%.
  • Usually muted around earnings cycles let alone the FOMC, markets say a decent pick-up in swappable corporate issuance noted: $2.5B #Temasek ($750M 10Y +40, $750M 20Y +65, $1B 40Y +85) and $1.5B Royal Bank of Canada ($850M 3Y +30, $650M 3Y FRN/SOFR+36).
  • The 2-Yr yield is down 0.4bps at 0.1941%, 5-Yr is down 0bps at 0.7117%, 10-Yr is down 0.2bps at 1.2746%, and 30-Yr is up 1bps at 1.9248%.
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