A Touch Firmer In Asia

Overnight trade saw Tsys draw some early support from geopolitical tensions surrounding Russia, while there may have also been some focus on an Axios source piece which noted that "the universe of Democratic senators concerned about raising the corporate tax rate to 28% is broader than Sen. Joe Manchin, and the rate will likely land at 25%," which could pose some hurdles for the broader fiscal impetus in the U.S. T-Notes edged away from highs as e-minis pared their early losses, with the former last trading +0-01+ at 132-13+. The belly outperforms in cash trade with 5- to 10-Year paper richening by ~1.5bp vs. settlement levels as of typing. Asia-Pac flow was headlined by a 20.0K block lift of the TYM1 131.00/130.00 put spread, which saw paper pay 0-11.

• As a reminder, the cash Tsy curve twist flattened on Friday, with 20s and 30s richening at the margins (by ~1.5bp & ~0.5bp respectively) come the bell. The outperformance for the 20-Year space perhaps came on the back of incremental support as the latest quarterly Treasury survey of dealers saw the dep't seek comments re: the demand & trading performance of 20s (a year after the reintroduction of auctions of the tenor). Elsewhere, the Treasury asked dealers for their views on how a potential reinstatement of the federal debt limit on July 31 will impact the Tsy market & supply of bills. Bank of America rounded off the week's financial supply, coming to market with a record (for bank issuance) $15bn in paper, which would have provided some hedging-related support for the Tsy space.
• Monday's local docket is sparse with Fed officials now in the pre-meeting blackout period, leaving broader headline flow in the driving seat at the start of a new week.