TYH2 Looks Through Recent Lows At Re-Open

TYH2 trades through Tuesday’s low at the re-open, but now operates off worst levels, -0-03 at 126-15+. Technical Support is seen at the 61.8% retracement of the ’18-’20 bull cycle (126-10+)

• To recap, cash Tsys finished 4-5bp cheaper on Tuesday, with the front end leading the way lower, resulting in some modest bear flattening of the curve. NY trade was fairly limited, with a chunk of the weakness seen in Asia as some pointed to convexity hedging-like flows in swaps. Some have also suggested that Japanese repatriation flows have provided s source of pressure for U.S. Tsys during Tokyo trade on Monday & Tuesday.
• Broader core FI weakness kept a lid on the space at different points in the day, as did the eventual uptick in U.S. equities.
• 3-Year Tsy supply stopped through by 0.3bp, with primary dealer takedown tumbling to a record low, while the cover ratio hovered around the recent average witnessed at 3-Year auctions.
• There isn’t much in the way of meaningful tier 1 headline risk events slated for Asia-Pac hours. Looking ahead, Wednesday’s NY docket is headlined by Fedspeak from Bowman & Mester, in addition to 10-Year Tsy supply.