2-Way Flow Ahead Of Risk Events

Negative news flow evident over the weekend (centred on the lockdown situation in Europe & the UK) resulted in risk-off flow early on in Asia-Pac dealing, this added to a degree of caution ahead of this week's risk-laden U.S. docket, providing a bid for Tsys, with weak crude oil prices (partly driven by idiosyncracies) also providing support. However, T-Notes are now back from best levels, last +0-00+ at 138-07+, after the Nikkei 225 traded on the front foot, which allowed 5&P 500 e-minis to bottom out and unwind early losses. Cash Tsys sit unchanged to 1.5bp richer across the curve, with 10s leading. A ~2.5K block sale of T-Notes also helped the space back from early highs. Headline flow has generally been light since the re-open, outside of a stronger than expected round of Chinese Caixin manufacturing PMI data, which had no real impact on the space.

• As a reminder, weakness into Friday's close saw T-Notes go out at worst levels of the day, with bear steepening of the curve, as the cash Tsy space cheapened by up to ~6.0bp. The major Wall St. cash indices managed to edge away from lows, but the S&P 500 still finished ~1.2% weaker come the bell. There was little in the way of outright, clear catalysts for the late move, with 30-Year swap spreads moving back from intra-day wides. It may have just been a case of some notable position squaring ahead of this week's impending risk events after month-end support evaporated.
• October's ISM m'fing survey is due to be released today, although focus is set to fall on the impending round of local risk events in the coming days, namely the U.S. election and latest FOMC decision.