A Touch Cheaper In Asia

Friday's uptick on Wall St. has resulted in a move higher in the Nikkei 225 early this week (+1.8%), while e-minis have also ticked higher. This has resulted in some modest pressure for U.S. Tsys & core FI during Asia dealing, while the havens (JPY, USD & CHF) find themselves at the bottom of the G10 FX table.

• Headline flow has been limited during Asia-Pac hours, with much of the focus falling on the regional COVID situation and headwinds for global trade.
• T-Notes last print -0-03 at 134-01, sticking to the confines of a 0-06 range and operating on relatively limited volume. Cash Tsys run 0.5 to 1.5bp cheaper across the curve, with the belly leading the way lower ahead of this week's 2-, 5- & 7-Year supply schedule. Asia flow was headlined by a 10K screen seller of the TYU1 135.00 calls.
• The weekend saw most of the headline focus continue to fall on the situation in Afghanistan, which is seemingly hampering favourability metrics re: U.S. President Biden. Meanwhile, on home shores, a BBG source report suggested that "U.S. Treasury Secretary Janet Yellen has told senior White House advisers that she supports reappointing Jerome Powell as Federal Reserve chair." To recap, U.S. Tsys finished Friday's session little changed across the curve, going out flat to ~1.0bp cheaper on the day, with 10s representing the weakest point on the curve. Dallas Fed President (Hawk, '23 voter) introduced a more caveated view surrounding tapering, at least on his part, with his focus seemingly falling on the evolution of the Delta COVID strain in the U.S. Elsewhere, late on Friday saw confirmation that the Fed's annual Jackson Hole symposium will shift to a virtual format.
• European flash PMI data may set the tone ahead of NY trade. Monday's U.S. docket will see the release of flash PMI data, the latest Chicago Fed national activity index reading and existing home sales data.