A Touch Steeper Overnight, As Matters On The Hill Dominate

The apparent narrowing of the fiscal divide on the Hill has provided some light support to e-minis in a holiday thinned Asia-Pac session, which provided light pressure to T-Notes, last -0-03 at 139-14. Still, it is worth remembering that Senate Majority Leader McConnell played down any prospect of the Democrats' proposal being passed through the Senate on Wednesday. The curve is a touch steeper, with cash Tsys 0.2-1.3bp cheaper vs. closing levels.

• Fiscal prospects dominated market sentiment on Wednesday, and the curve ultimately steepened, although the space finished off intraday cheaps on the aforementioned McConnell comments. Month-/quarter-end rebalances were also scrutinised, with some disappointing headlines on the COVID-19 vaccine timeline also in the mix (Moderna stressed that there will be no vaccine available before the U.S. Presidential election). Elsewhere, ADP labour market data and the Chicago PMI readings topped expectations, while a slew of Fedspeak did little for the market. Also worth flagging that the Fed extended the limitations imposed on bank dividends and equity buybacks, as expected, which will help promote liquidity over the year end "turn."
• The ISM m'fing survey, weekly jobless claims and PCE data suite headline the local economic docket today. Elsewhere, Fedspeak from Williams and Bowman is due, as is the Treasury announcement re: the sizing of next week's 3-, 10- & 30-Year auctions.