Two-Way Trade Over U.S. SPR Release Rumours, Bid Overpowers Initial Selling

The Tsy market has traded in a two-way fashion on the back of the previously flagged BBG source report pointing to the potential for a sizable oil release from the U.S. SPR, with the initial move lower (on the reduced stagflationary burden) giving way to a pull higher as the purer traditional lower inflation dynamic kicked back in given the potential for lower fuel prices (the moves in Tsys are marginal in the grander scheme of things, with plenty of inflationary pressure observed outside of the oil markets). TYM2 printed a fresh session low, before moving to fresh session highs, with the contract last +0-08 at 122-28, 0-01 off best levels, operating in a 0-10 range thus far. Meanwhile, cash Tsys run 1.5-3bp richer across the curve, with 3s leading the bid, bull steepening.