TY Looks Through Overnight Base As Bunds Tick Lower

TY futures looked through their overnight base as Bund futures pulled lower around the turn of the hour, although we don’t see much in the way of an overt catalyst to drive the move, so point to the traditional pick up in activity surrounding the old Bund futures open and European reaction to yesterday’s NY afternoon moves. TY futures haven’t challenged yesterday’s low and operate in a contained 0-06+ range thus far. Cash Tsys sit little changed to 1.5bp cheaper on the session, with the 7- to 10-Year zone leading the cheapening.

• A move away from session bests in Aussie rates (after some knee jerk richening), coupled with post-budget weakness in NZGBs, kept the limited early Asia Tsy rally in check.
• Questions surrounding the strength off the Chinese recovery remain on the radar.
• Overnight flow was dominated by a block buyer in TU futures (+2.49K)
• The latest barrage of Fedspeak, existing home sales & weekly jobless claims data, the Philly Fed survey and debt ceiling headline risk are set to provide the most notable points of interest in NY hours.