A Narrow Re-Open After Wednesday's Bid

T-Notes operating around their late NY levels, +0-07+ at 135-31+, looking through the latest study surrounding the Pfizer COVID vaccine, with the notes that accompanied the study a little more encouraging than the headlines questioning the efficacy re: fighting the South African strain of the virus.

• The space richened on Wednesday with the retracement from intraday cheaps playing out during NY hours. The move wasn't data driven (at least in a traditional sense) and may simply reflect the notion that the recent cheapening/steepening, evident across the bulk of major global FI markets, has simply gone too far, too fast (at least in terms of recent history). While the stronger than expected local data releases (headlined by retail sales and PPI) had some suggesting that fiscal support may not need to be quite as aggressive as touted by the Biden admin.
• The curve bull flattened in the main, although 20s saw some marginal underperformance on the back of a soft round of 20-Year supply from the U.S. Tsy. The auction tailed by a little over 2.0bp, with the cover ratio sliding to below average levels as dealer participation picked up.
• There was nothing in the way of a notable reaction to minutes from the latest FOMC decision, with no major surprises witnessed.
• On the flow side, a couple of block buys in WNH1 also helped underscore the flattening theme.
• Chinese markets return from the LNY holiday period today and may drive sentiment during Asia-Pac hours.