FED: US TSY 29Y-10M BOND AUCTION: NON-COMP BIDS $27 MLN FROM $22.000 BLN TOTAL

• US TSY 3Y AUCTION: NON-COMP BIDS $130 MLN FROM $58.000 BLN TOTAL

• With crude futures remaining towards the lower end of the most recent range and major equity benchmarks continuing to trade in a resilient manner, the Australian dollar continues to outperform on Tuesday. As a reminder, the initial Aussie boost was provided by a hawkish leaning RBA Hauser and combining this with a softer dollar backdrop, AUDUSD has extended intraday gains to around 1%.
• Fresh cycle highs at 0.7154 fell just 4 pips shy of the key resistance point at the 2023 highs. 0.7208 represents the next notable target, the 61.8% of the Feb 25 ‘21 - Apr 9 ‘25 bear leg, while above here, 0.7283 is the June 2022 high.
• In the crosses, we noted fresh cycle highs for AUDJPY which operates at the highest level since 1990, while AUDNZD has also surpassed the 1.20 mark for the. Downside for EURAUD has also extended on a break of the 2025 lows below 1.6358. The next key level is located at 1.60 which provided excellent support across 2024.

European curves bull steepened sharply Tuesday on hopes for a de-escalation in the Middle East war.

• Cash EGBs and Gilts caught up in early trade with the overnight cross-asset rally triggered by US President Trump's comment following Monday's European close that the conflict with Iran could be resolved "very soon".
• The associated pullback in energy prices helped relieve pressure at the front end of curves especially, with periphery/semi-core EGB spreads tightening markedly (led by high-beta BTPs and GGBs) as equities bounced.
• Yields would pick up from early lows by mid-session, with 10Y Bund yields temporarily erasing their early fall (session high 2.879% vs prior close 2.859%), mirroring a bounce in oil.
• A final pullback in energy prices in afternoon trade would cement the rally, however. On the day, Gilts outperformed Bunds after recent underperformance, with the German curve actually twist steepening slightly (Buxl yield edged up).
• In data, German imports were much weaker than expected in January, but this was not a market mover.
• Most attention Wednesday (outside of geopolitical developments) will be on US CPI data, though we get some final February inflation data out of Germany and Portugal as well as Spanish retail sales, along with appearances by BOE's Breeden and ECB's Guindos and Schnabel.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 8bps at 2.238%, 5-Yr is down 5.4bps at 2.468%, 10-Yr is down 3.1bps at 2.828%, and 30-Yr is up 0.4bps at 3.432%.
• UK: The 2-Yr yield is down 13.1bps at 3.859%, 5-Yr is down 10.2bps at 4.062%, 10-Yr is down 10bps at 4.547%, and 30-Yr is down 7.3bps at 5.229%.
• Italian BTP spread down 6.7bps at 68.6bps / Greek down 5.6bps at 68.2bps