Asia Looks To Buy the Dip

Wednesday's Asia-Pac session was light on news, but that didn't stop regional investors from dipping their toes into long U.S. Tsy positions on the back of Tuesday's dip. Desks cited solid demand from real money a/cs in the 10-Year zone as the curve saw some light bull flattening (cash Tsys trade up to 1.0bp richer at typing), with T-Notes +0-05 at 137-19 on volume of ~120K. Eurodollar futures are unchanged to +1.0K through the reds, with the highlight on the flow side coming in the form of an EDU2/U4 steepener (which saw 5.5K lots trade in 1 clip) although outright and spread flow was generally mixed in nature.

• As a reminder, the fiscal dynamic in DC took some positive turns on Tuesday, although the initial support package being touted is some way shy of the Democrats previously outlined acceptable level. Lower tier bi-partisan work is underway (although broader support for that particular package isn't necessarily a given) and there is potential for a further fresh round of stimulus to be deployed when President-elect Biden assumes office (pending the usual approval channels of course), with Biden and his economic team pushing for more to be done beforehand. A strong m'fing ISM reading (albeit a touch shy of exp.) added further fuel to the fire. 30s cheapened by a little over 10bp come the close, with 10s & 30s moving back towards recent highs in yield terms as the curve bear steepened. 10-Year BEIs registered fresh YtD highs in the process. Fresh all-time highs for equities were also seen, although that particular move faded from extremes. Volumes were more than healthy on the day.
• ADP employment data and Fedspeak from Powell & Williams headline on Wednesday.