Biased Lower In Asia

Weakness in T-Notes allowed the 7- to 10-Year zone of the cash Tsy curve to underperform overnight, cheapening by ~3.0bp on the day, with T-Notes last printing -0-02+ at 131-03+, off of worst level. The move was aided by JPY weakness (much of the JPY movement surrounded the end of FY flows in Japan around the Tokyo fix) and firmer than expected official PMI readings out of China. Elsewhere, participants continue to look ahead to today's infrastructure related address from U.S. President Biden.

• As a reminder, T-Notes recovered from worst levels of the day on Tuesday. The curve twist flattened on Tuesday, cheapening out to 7-Years but richening further out, with 30s ~3.5bp dearer come the close, after the longer end unwound the early cheapening that was seen on Tuesday (with the early move lower attributed to the U.S. fiscal backdrop), aided by block buys in US and WN futures during NY hours. 10-Year Tsy yields failed to break above the previously flagged 50% retracement of the move from the '18 high to the '20 low (located at 1.7866%). The input from the fiscal impulse may have been met by the touted quarter end rebalancing out of equities and into bonds on Tuesday (and the US & WN block buys), preventing bears from really testing the aforementioned technical level. A multi-month high (and much stronger than expected) consumer confidence reading provided some light, albeit brief, downside pressure for the space during NY hours. Fedspeak from Williams, Quarles, Barkin, Bostic & Kaplan failed to move the needle.
• Biden's aforementioned infrastructure address (scheduled for 16:20 Eastern), the ADP employment reading & Chicago PMI print headline locally on Wednesday.