Asia Assesses Lower Yields

A muted re-open for T-Notes with the contract hovering around late NY levels, dealing +0-04 at 133-11.

• T-Notes went out near best levels of the day on Tuesday, with Tsys firming into the close as Friday's rally extended on the first full day of trading for the week. There were several factors in play, the most notable was a softer than expected services ISM survey, while some desks also pointed to broader questions surrounding the efficacy of COVID vaccines vs. the delta variant, as others touted further book squaring ahead of the June FOMC meeting minutes which will hit on Wednesday. NY hours saw the space build on early gains that spilled over from Bunds, with the abrupt fall in oil futures (from cycle highs) also playing a part. The 7- to 20-Year zone of the curve led the rally in cash trade, richening by ~7.5bp on the day.
• 10-Year yields printed at the lowest level seen since late February, registering their lowest close over that horizon, while 30s closed below the 2.00% mark, also for the first time since February.
• On the flow side 3x block buys of FV futures (totalling 36.5K lots, equivalent to ~$1.86mn DV01) and financial corporate issuance related swap receiving also fed the bid during NY hours.
• There is nothing in the way of tier 1 risk events slated for Asia-Pac hours.