Twist Steepening Apparent On Monday

TYM2 a touch firmer at the re-open, last dealing +0-00+ at 119-22.

• To recap, the cash Tsy curve twist steepened on Monday, pivoting around 20s, with the major benchmarks running ~4bp richer to ~2bp cheaper come the close. 7s outperformed and 30s found themselves at the other end of the performance table.
• A solid corporate issuance slate likely aided the wider steepening trajectory, with the space moving off richest levels of the session as equities recovered from lows of the day (with the energy sector outperforming as crude oil moved higher). Still, the S&P 500 was 0.4% lower come the bell.
• A reminder that softer than expected Chinese economic activity data for April really set the tone in the first Asia-Pac session of the week (in the wake of PBoC inaction via its latest MLF operations), weighing on broader risk appetite, supporting Tsys. That was before the latest batch of ECB speak applied pressure to EGBs., which spilled over into Tsys. Tsys then found a bit of a base into NY hours, with much softer than expected NY Empire manufacturing data doing bulls no harm. Fedspeak saw Williams point to the need for 50bp hikes over the coming meetings, in addition to the need to get real rates back to 0 in the next year or so. Elsewhere, Cleveland Fed President Mester (’22 voter) maintained her usual line of hawkish thinking in a two-part interview with MNI.
• A couple of early NY block buys in FV futures (+5K apiece) supported the belly, with another block buy (+6,202) seen later in the day. Meanwhile, an apparent TU/TY steepener block (+10,400/-5,450) was seen late in the NY session.
• The Asia-Pac docket is relatively light on Tuesday. Minutes from the latest RBA meeting will be worth watching, although macro spill over should be limited at best. Looking ahead, Tuesday’s NY session will bring the release of retail sales data, in addition to a deluge of Fedspeak (Powell, Bullard, Mester, Harker, Kashkari & Evans are all due to speak).