Twist Steepening Seen On Wednesday, Short End Flow Headlines

T-Notes last -0-05 at 131-21+, with the contract operating around late NY levels.

• The cash Tsy curve twist steepened on Wednesday, pivoting around the 5- to 7-Year sector, with Tsys out to 5-Years richening by ~0.5bp, while 30s cheapened by ~4.0bp on the day. Broader Fedspeak offered little new on net, with the minutes from the latest meeting consistent with Fed Chair Powell's messaging. In terms of the short end, the minutes noted that "the Federal Reserve could consider adjusting its administered rates if undue downward pressure on overnight rates emerged. Responses to the Desk surveys indicated that many market participants anticipated adjustments to the interest on excess reserves rate and the ON RRP rate at or before the June meeting." This triggered selling of FFK1 (both outright and vs. FFJ1). But it was an earlier round of 20K lots of block buying of the Eurodollar red pack that headlined on the flow side during NY hours, providing some support to the shorter end of the Tsy curve in the process. Elsewhere, Tsy Secretary Yellen released a proposal to raise ~$2.5tn in tax revenues over a 15-Year period.
• There is nothing in the way of tier 1 risk events slated for Asia-Pac hours.