Some Demand Emerges In Asia

TYZ2 trades 0-02+ off the peak of its 0-14+ overnight range, on healthy volume of ~117K. Meanwhile cash Tsys run 3-5.5bp richer across the curve, with intermediates leading after they drove yesterday’s weakness.

• Yesterday’s move pulled the 2-/10-Year yield spread away from cycle flats, with the overnight move allowing the 5-/30-Year spread to edge away from its own cycle extremes.
• The Asia bid was likely on regional demand in light of the recent sizeable cheapening and/or short cover, with a lack of notable headline flow. It also came as the USD traded away from cycle highs and e-minis moved higher, introducing the potential for cross-market influences.
• Asia-Pac hours saw a block seller of the FV/UXY/WN butterfly, which seemed to represent profit taking after a corresponding long fly position was established during Asia-Pac hours back in August.
• Elsewhere, there was a block seller of TY futures (-3K) and a block seller of TYX2 110.00 puts (-5K), with the latter once again perhaps representing a profit taking move after a corresponding position was lodged yesterday.
• Tuesday’s NY session will be headlined by durable goods and consumer confidence data. 5-Year Tsy supply will also cross, while Fedspeak will come from Powell (on digital currencies), Bullard, Evans & Kashkari.