A Touch Firmer Overnight

All in all there was little to report during Asia-Pac trade, with tight ranges in play for U.S. Tsys. T-Notes stuck to the confines of a 0-03+ range, last +0-03+ at 137-28, while cash yields sit within 1.0bp of closing levels across the curve, with very modest richening/bull flattening seen. Continued worry surrounding the COVID-19 situation in the UK and a sense of more being needed re: U.S. fiscal support (despite the passage of the latest fiscal support scheme through Congress) blunted any lingering risk appetite in what proved to be a headline light overnight session.

• To recap, T-Notes corrected from best levels as we moved through NY trade on Monday, leaving the contract little changed on the day as it closed just off session lows. There was little in the way of overt drivers for the reversal, but the impending passage of the U.S. fiscal support scheme and assurances from leading health bodies that the new COVID-19 mutation seen in the UK wasn't a gamechanger for vaccine efficacy likely took the edge off of things (Although that feeling faded overnight, as mentioned). The curve flattened on the day, but 30s were less than 2.0bp richer come the bell. The latest 20-Year Tsy auction was solid enough, stopping through WI by 0.8bp, while the cover ratio was in line with the recent average, with dealer takedown just a touch above the recent norm. On the flow side, a 50K buyer of the 1x2 TYG1 138.00/137.00 put spread provided the highlight late in the day.
• Locally, Final Q3 GDP data, consumer confidence and existing home sales data hit on Tuesday. 5-Year TIPS supply is also due.