Tight Pre-FOMC Range Seen In Asia

T-Notes corrected from overnight lows as Aussie bonds moved higher, printing fresh session highs on the move, before moving back from best levels. The contract last trades -0-02 at 131-31, within a 0-05 range. Cash Tsy trade has seen some light twist steepening of the curve. Macro headline flow was light, with continued speculation surrounding the tax side of U.S. President Biden's fiscal plan. On the flow side we saw 10.0K of the TYM1 133.50 calls lifted at 0-09 via a block trade (we saw a 10.0K block buy of the same option at 0-24 ahead of European hours on 21 April). There was also a 2,350 block seller of UXYM1 futures.

• A reminder that Tuesday saw bear steepening of the cash Tsy curve, with 10+-Year paper cheapening by ~5.5bp on the day come the bell. Much stronger than expected consumer confidence data (supported by stimulus cheques and positive signs from the labour market internals of the survey) aided the momentum, with a softer than expected, but steady, Richmond Fed m'fing index reading also seen. Pricing of Italy's US$ of issuance also weighed. Some desks pointed to setup ahead of the 7-Year auction as another contributory factor to the pressure. The auction stopped virtually on the screws, with a below average round of dealer takedown and steady (just above average) cover ratio, representing a solid round of supply. Late NY flow was headlined by an 11.0K block buy of FVM1 & 5.0K block buy of TYM1, while late Eurodollar trade saw screen sales of over 30K in both EDU1 & EDZ1.
• The latest FOMC decision headlines the local docket on Wednesday (please see our full preview for more on that matter).