Tight Ahead Of 20-Year Supply

Participants are seemingly comfortable with current U.S. Tsy valuations, mostly looking through some pressure on the broader equity space during Asia-Pac dealing. T-Notes have stuck to a narrow 0-03 range thus far, last printing +0-00+ at 132-18+, with less than 75K lots changing hands. Cash trade has seen some modest twist steepening of the curve, with 30s cheapening by ~0.5bp while paper out to 7-Years sits ever so slightly firmer on the day.

• As a reminder, bull flattening was apparent on the cash Tsy curve during Tuesday trade, with 10+-Year paper richening by ~4.5bp on the day. There was little in the way of meaningful news flow apparent on Tuesday, with increased global pockets of worry re: COVID & geopolitical tension surrounding Russia evident. Others pointed to technical related selling/going too far too quickly in the equity space, as narrative fitting did the rounds. Lower oil prices also aided the bid in Tsys, as did a 3K block buy of USM1 during the NY morning. There was nothing in the way of major local data. Elsewhere, the Fed continues to observe its pre-meeting blackout.
• Participants will now assess the setup ahead of today's 20-Year Tsy auction.