A Little Firmer Overnight

U.S. Tsys drew support from a modest downtick in e-minis during Asia-Pac hours (after the S&P 500 lodged a fresh record high on Monday), with geopolitical tension centring on the Middle East, broader COVID worry and regulatory matters in China all presenting relatively familiar topics of headline flow. That allowed T-Notes to unwind their post settlement losses lodged late in the NY day, with that contract last dealing +0-01 at 134-11+, while cash Tsys across the curve sit little changed to ~1.5bp richer on the day into European hours.

• To recap, Tsys moved back from best levels on Monday as the major U.S. equity indices and oil futures recovered from their intraday lows. This came after equities opened on the heavy side owing to the geopolitical risk developments surrounding Afghanistan and softer than expected Chinese economic data. The 3 major U.S. indices actually managed to finish Monday's session in the green, with the S&P 500 (both cash and futures) registering a fresh all-time high in the process. Cash Tsys were little changed to a touch richer come the bell, with benchmark yields flat to ~1.5bp lower and 7s outperforming. Flow was headlined by an FV/WN futures flattener (-17,773 FV vs. +2,565 WN).
• The domestic docket picks up Tuesday with retail sales set to headline in U.S. hours. The slate will be bolstered industrial production and capacity utilisation. Fedspeak will be headlined by an address from Fed Chair Powell ahead of the release of the FOMC meeting minutes (due Wednesday).