Still Taking Cues From EGBs Ahead Of NY Hours

Tsys continue to lean on core EGBs for direction with the early richening unwound on the back of the EGB cheapening in lieu of the “significant” uptick in the latest ECB consumer inflation expectations survey. The curve has twist flattened, with the major benchmarks running 2bp cheaper to 1bp richer, pivoting around the 7- to 10-Year zone. Note that 2s failed to get anywhere near a challenge of yesterday’s sub 3.90% base during the early richening, while TY bulls only managed to push through yesterday’s high by 0-00+, leaving the contract in a fairly limited 0-07+ range thus far. Tsy futures participation seemed heavier on the early richening than during the subsequent cheapening (at least in terms of notable flow).