Twisting Steeper On Tuesday

TYZ1 a little off NY lows, last dealing -0-00+ at 129-24+, in line with late NY levels.

• To recap, the cash Tsy curve twist steepened on Tuesday, as 2s finished incrementally richer on the day, while 30s cheapened by ~6bp. Hawkish rhetoric re: tapering from Atlanta Fed President Bostic & stronger than expected Eurozone PMI data provided the pre-NY cheapening impetus. 7-Year Tsy supply was well received (going against some expectations), stopping through by 1bp, with the cover ratio moving to a YtD high (for 7s), while dealer takedown was a touch higher vs. the prev. auction, but held below the recent average. Note that intermittent technical difficulties resulted in the NY Fed postponing Tuesday's purchase operation, which would have covered $1.075B of 7.5- to 30-Year TIPS. Broader volume was supported by ongoing futures roll activity. Flow was headlined by a block buy in UXY futures (+5,466), which seemed to represent profit taking from a short position entered last week, while TU futures block buys (+7K & +9K) helped support the front end of the curve.
• The latest RBNZ decision headlines the Asia-Pac docket on Wednesday. Meanwhile, NY hours will see the release of the minutes from the FOMC's most recent monetary policy decision, the PCE suite, weekly jobless claims data, the second GDP estimate for Q3, durable goods data and new home sales, as well as the final UoM sentiment reading for Nov.