Asia Wakes Up To A Much Flatter Curve

T-Notes operate around late NY levels, shy of their Monday peak, last -0-04 at 134-18 after equities recovered from their worst levels of the day into the NY close.

• The cash curve bull flattened on Monday with 2s finishing little changed, while the long end richened by ~10bp come the close. The lower oil/equity/yield theme was in play from the Asia re-open, with worries surrounding the delta COVID variant evident. Early NY trade saw the moves extend, with the usual talk of positioning washouts for bearish Tsy/Fed hiking bets. Volume comfortably topped the typical averages. Tightening in long end swap spreads also played into the richening narrative, with receiving flows clearly dominating on the day. Block buying of long end futures was witnessed during the NY morning, while an FV/US/WN fly-like structure (long the US leg) was seen during the London morning.
• We should also flag that a group led by the U.S. attributed the well documented Microsoft Exchange hack to groups that are linked to the Chinese government, which would have added some geopolitical worry into the underlying bid.
• Asia-Pac hours see the minutes from the RBA's most recent monetary policy decision and latest LPR fixing from the PBoC dominate the docket, while a holiday in Singapore may thin liquidity a little. Housing starts and building permits headline the local docket during NY hours.