Well Received Supply Helps Space Recover

T-Notes last print +0-01+ at 139-11+ after a well-received round of 5-Year supply helped the contract, and indeed the broader space, firm into the bell on Wednesday.

• Early spillover from EGBs surrounding German fiscal dynamics, stronger than expected U.S. durable goods data (coupled with positive revisions) and optimism re: treatment for COVID-19 among some of the elderly supported broader risk sentiment on Wednesday, initially forcing the curve steeper.
• A TY block seller also played into the weakness.
• 10s respected the upper bound of the recent yield range, failing to break through 0.72%.
• The space was happy to look through the latest ratcheting up of Sino-U.S. tension.
• It was the aforementioned round of well received 5-Year supply that saw yields back from cheaps, withs 5s unwinding all of their early losses, although the curve still closed a touch steeper vs. Tuesday levels. The auction stopped through WI by 0.9bp, with the cover ratio comfortably above the recent averages as dealer takedown slid and indirect participation picked up.
• Little in the way of tier one event risk on the docket in Asia-Pac hours, ahead of Fed Chair Powell's heavily awaited address later on Thursday.