Belly Outperforms On Monday

T-Notes re-open around late NY levels after rallying to best levels of the day into Monday's close, last +0-05+ at 131-09.

• Tsys firmed across the cash curve on Monday (unwinding some early weakness in the longer end), with the belly outperforming as the space reversed some of Friday's losses, 5s leading the way, as that point richened by 5.5bp come the close. The 2-/5-/10-Year butterfly printed above 0bp for the first time since Mar '20, although that particular strategy closed in negative territory. A couple of sell-side names have come out with outright long 5-Year Tsy recommendations since Friday's NFP report. A reminder that widespread holidays in both Europe & Asia limited broader volumes on Monday, with an abridged cash session in play.
• Headline flow saw moderate Democratic Senator Manchin reiterate his pushback against the 28% corporate tax rate proclaimed in President Biden's infrastructure plan, once again pointing to 25%, a level that he has previously suggested that he could support.
• Elsewhere, Cleveland Fed President Mester maintained the central Fed message in the wake of Friday's NFP report. Mester told CNBC that she is "thinking that we'll see a very strong second half of the year, but we're still far from our policy goals."
• The ISM services survey met broader expectations, with the headline index topping 60.0.
• The latest Chinese Caixin Services PMI survey headlines the regional Asia-Pacific docket on Tuesday, with the latest RBA decision also due (the latter is expected to be a non-event). An ongoing market holiday in Hong Kong may limit liquidity during Asia-Pac hours.