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Steadying Ahead Of 5Y Supply, Potential House Debt Limit Vote

US TSYS

Treasuries have steadied out in overnight trade Wednesday compared with the bullish risk-off moves of the previous two sessions.

  • The Tsy curve has reversed a bit of Tuesday's bull steepening overnight, with the short end underperforming. 2Y yields +3.3bp vs 10Y +0.8bp.
  • Yield movements are taking their cue from equity futures, which have recovered a little from Tuesday's lows set following reports of potential First Republic Bank asset sales - helped by strong tech/cloud earnings (Microsoft, Alphabet).
  • Data today includes March durable goods and trade balance (0830ET).
  • Supply today includes auctions of $24B in 2Y FRNs (1130ET) and $43B 5Y Note (1300).
  • On that note, reports suggest a debt limit vote in the House could come as soon as today after a very late night of wrangling over the bill; the House Republicans meet behind closed doors at 0900ET.

Current levels:

  • The 2-Yr yield is up 3.3bps at 3.922%, 5-Yr is up 1.2bps at 3.4611%, 10-Yr is up 0.8bps at 3.4071%, and 30-Yr is up 0.1bps at 3.6594%.
  • Jun 10-Yr futures (TY) down 3.5/32 at 115-22 (L: 115-18 / H: 115-25.5)

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