Bid At The Open

TYH2 bid at the re-open, with COVID worry/lockdowns in Europe and U.S. Democratic Senator Manchin’s effective roadblocking of President Biden’s build back better scheme supporting Tsys early this week, while e-minis are under pressure, TYH2 last +0-07+ at 131-13.

• To recap, T-Notes finished a little below the mid-point of their Friday range at the end of last week, with hawkish comments from Fed Governor Waller re: rate liftoff and balance sheet runoff applying some pressure during the NY afternoon. The curve twist flattened around the 7-Year point, with 2s cheapening by a touch over 2bp on the day, while 30s richened by the best part of 5bp, going out around firmest levels. It would seem that weakness in the U.S. equity space supported the longer end of the Tsy curve, while the aforementioned hawkish rhetoric from Waller provided the pressure further forward.
• The latest PBoC LPR fixing may draw broader interest in Asia-Pac hours (more on that later), while the U.S. docket is bare on Monday. This may result in greater sensitivity to broader order & headline flow, with liquidity set to thin out further before Christmas.