A Touch Cheaper Overnight

A fresh multi-decade high for the Nikkei 225 helped apply modest pressure to U.S. Tsys during early Asia-Pac dealing, with some feedthrough from the Aussie bond space also evident. A couple of pockets of TY screen selling added to the downward pressure, although the contract stuck to a 0-05 range, recovering from worst levels as ACGBs turned bid to last trade -0-03 at 133-06+. Meanwhile, cash Tsys trade little changed to ~1.0bp cheaper on the day, with 5s underperforming

• To recap, T-Notes closed a little shy of their NY peak on Monday, while the cash Tsy curve saw some modest bull flattening during the first trading session of the week, with 2s little changed and 30s dealing ~3.0bp richer come the bell. Sino-U.S. tensions surrounding Taiwan provided some modest support for the Tsy complex, as did the latest round of fear surrounding Chinese regulatory scrutiny, which hampered Chinese tech names during Monday's Asia-Pac equity trade. The lack of conventional coupon Tsy supply evident this week was also touted as a supportive factor, although $IG issuance was brisk on Monday.
• CPI data headlines the NY docket on Tuesday, with NFIB small biz optimism and real AHE data complimenting.