Tight Start After Further Flattening

A muted re-open for T-Notes, trading -0-00+ at 133-17, around late NY closing levels and a little shy of Wednesday's peak.

• Bull flattening of the cash Tsy curve was at the fore on Wednesday, with longer dated paper finishing the day ~4.0bp richer, while the shorter end of the curve was little changed. 10s and 30s extended their move lower in yield terms, registering fresh multi-month lows in the process
• Desks pointed to continued positioning washouts as a driver of the richening/flattening. Elsewhere, the move away from cycle highs in oil extended, while the minutes from the June FOMC meeting seemed to shed little fresh light on matters. Re: tapering "participants generally judged that, as a matter of prudent planning, it was important to be well positioned to reduce the pace of asset purchases, if appropriate, in response to unexpected economic developments, including faster-than-anticipated progress toward the Committee's goals or the emergence of risks that could impede the attainment of the Committee's goals." The general FOMC expectations reaffirmed the view of transitory upward price pressures, although upside risks were the dominant theme outside of the central scenario.
• Longer dated swap spreads widened in the latter rounds of dealing, with some desks citing an unwind of convexity-related receiving, which was seen earlier in the day.
• Weekly jobless claims data headlines the local docket on Thursday, although some attention will be on the publication of the ECB's heavily anticipated strategy review and the subsequent press conference surrounding the matter.