Two-Way Tuesday

TYZ2 deals around late NY levels, -0-02 at 110-27, after Netflix earnings applied some modest pressure into the close as the NASDAQ led e-minis higher.

• Ongoing Fedspeak from Kashkari has highlighted a need for continued tightening, as he suggested that there would be no pause in tightening until there is compelling evidence that core inflation has peaked.
• Cash Tsys finished NY hours 1bp richer to 1bp cheaper, twist steepening at the margin. Desks noted that block trade activity had an outsized impact, with liquidity remaining impaired.
• Trade was two-way, with the FT flagging a likely delay to BoE QT, triggering a bid in early London hours, before the story proved to be untrue, triggering a reversal.
• A fresh bid then came in ahead of NY hours.
• Downticks in Bunds and Gilts into the European/London cash close seemed to apply pressure to Tsys during the late NY morning.
• This came atter firmer than expected industrial production data, which was paired with a marginal upward revision, and a softer than expected NAHB housing market reading.
• The Asia-Pac docket is relatively limited, with the first notable risk event of Wednesday trade coming in the form of UK CPI data. Further out, housing starts and building permits data headline the NY data docket on Wednesday, with Fedspeak from Bullard, Evans & Kashkari, as well as the release of the Fed’s Beige Book, also due.