Signs Of Long End Demand Facilitate Twist Flattening

TYH2 flat at the re-open, dealing around late NY levels, +0-02+ at 128-19+.

• Hawkish Fed re-pricing weighed on the front end and belly of the curve on Thursday. Benchmarks out to 10s cheapened by 1.5-5.0bp come the close of NY dealing as a result, with shorter dated paper leading the way lower. Meanwhile, 20s and 30s richened by 1-2bp. 10s briefly showed above 1.75% in yield terms for the first time since April ’21, before backing off, with some long end demand becoming evident as 10s crossed that level & 30-Year yields neared 2.15%. This resulted in a twist flattening dynamic.
• Hawkish Fedspeak from Bullard re: balance sheet normalisation failed to provide much, if any notable impetus, given the hawkish repricing witnessed since the release of the FOMC’s Dec meeting minutes.
• $IG issuance remained brisk, although was less seemingly less meaningful for Tsy price action when compared to earlier in the week.
• Flow of note included an FV block sale (-12,689) during the NY morning, while late trade saw a UXY block sale (-3.8K).
• Focus is squarely on Friday’s NFP report, with the recent hawkish repricing in the front end of the Tsy curve & STIRs providing the potential for increased volatility if the dataset disappoints. Elsewhere, Fedspeak will come from ’24 voters Bostic & Daly.