A Touch Steeper Ahead Of Local Risk

Asia-Pac headline flow was sparse at best. Still, T-Notes tagged fresh session lows ahead of European hours on the back of a couple of 2.5K clips worth of TYM1 selling (on screen), last printing -0-04 at 131-16 (0-01+ off lows). The cash curve has bear steepened, longer dated Tsys are running ~2.5bp cheaper on the day. The pressure stemmed from spill over surrounding Australian bond supply matters and news that Tencent will price a $4bn round of US$ issuance as soon as today. Today's local risk events include U.S. CPI, 30-Year Tsy supply and the announcement re: the Fed's latest Tsy purchase schedule.

• The cash space saw very modest cheapening across the curve on Monday, with yields up to ~2.0bp higher come the bell. The atypical 3- & 10-Year auction offerings saw smooth enough digestion, with 3s stopping 0.2bp through WI, dealer takedown a shade below recent average levels and a softer than normal cover ratio, while 10s saw a 0.2bp tail, alongside average cover and dealer takedown. St. Louis Fed President Bullard told BBG that getting ~75% of Americans vaccinated would be a signal that the COVID-19 crisis was ending, a necessary condition for the central bank to consider tapering its bond-buying program, although he was keen to stress that "it's too early to talk about changing monetary policy. We want to stay with our very easy monetary policy while we are still in the pandemic tunnel. If we get to the end of the tunnel, it will be time to start assessing where we want to go next." The NY-Asia crossover saw comments from Dem Rep Payne, noting that U.S. President Biden told lawmakers that he was open to hiking the gas take by $0.05 to fund his infrastructure bill, although a subsequent round of comments from a White House official noted that Biden is not in favour of such a move. This came after Biden noted that he is "prepared to negotiate as to the extent of my infrastructure project as well as how we pay for it."
• Tuesday's aforementioned local risk events will be supplemented by a raft of Fedspeak.