Active In Asia Despite Thin Conditions

T-Notes corrected from worst levels of the Asia-Pac session after an initial flurry surrounding the U.S. fiscal dynamic and a breach of last week's lows (as well as a brief break below a level coinciding with the largest OI in TYH1 options, at 136.50) generated some pressure. That was before the ongoing political wrangling surrounding Trump impeachment matters, broader COVID-19 spread/mutation fears and simmering Sino-U.S. tensions (as well as softer e-minis) helped the contract back from early lows. The contract last trades at unchanged levels of 136-21, 0-06+ off intraday lows. Market conditions were a little thinner than usual owing to a Japanese holiday, which means that cash Tsys won't be open until London hours.

• T-Notes went out near worst levels of the day/week on Friday. Cash trade saw unchanged to cheaper closes, as 10s once again represented the weak point on the curve (+~3.5bp), with focus on a softer than expected round of NFPs (with the service sector providing the notable drag on the headline reading), while the participation rate held steady, leaving unemployment unchanged and underemployment a touch lower. Positive revisions also accompanied the Dec headline reading, while AEH were stronger than exp. On the flow side Friday's highlights came in the form of a FV block buy and TY/WN curve flattener. Comments from Fed Vice Chair Clarida were also noted, as he stressed that "the prospects for the economy in 2021 and beyond have brightened and the downside risk to the outlook has diminished." In the wake of the recent Fedspeak surrounding tapering matters Clarida noted that the time to slow the Fed's pace of bond buying lies somewhere "well down the road," and that he sees the Fed maintaining the current rate of its Tsy purchases through '21.
• Fedpseak from Bostic & Kaplan, as well as 3-Year Note supply will hit on Monday.