A Pause After The Flattening

A macro headline light Asia-Pac session did very little for broader impetus in the core FI space after the broader flattening pressure witnessed on Monday. This made for tight ranges, with participants seemingly happy to sit on the sidelines. T-Notes held a 0-02+ range as a result, last unch. at 138-20+, with cash Tsys sitting unchanged to 0.5bp richer across the curve.

• The fiscal impasse on the Hill coupled with European COVID worry supported Tsys and pressured e-minis on Monday, with further defensive posturing witnessed on the back of China's retaliatory sanctions towards U.S. corporates re: matters surrounding Taiwan. The curve bull flattened as cash Tsys richened by up to 5bp across the curve come the NY closing bell, with T-Notes closing a touch shy of best levels. A TY block buy during the NY afternoon helped support the broader bid theme.
• Eurodollar futures -0.5 to +0.5 through the reds.
• 2-Year Tsy supply is due Tuesday. Elsewhere, the flash durable goods data and consumer confidence readings are due, as is the Richmond Fed manufacturing index.