Cheaper & Steeper On Monday

TYZ1 little changed at the re-open, operating just above its NY session lows, +0-02 at 130-11+.

• The cash Tsy curve was subjected to bear steepening pressure on Monday, as the early, light bid evaporated. 2s were little changed and 30s ~7bp cheaper come the bell. Potential factors weighing on the space on the day included a firmer than expected round of Empire m'fing data, which saw all of the major price components firm, while former NY Fed President Dudley & ex-Richmond Fed President Lacker suggested that the central bank will probably have to raise its target for the federal funds rate to at least 3% (on BBG TV). A swelling corporate issuance slate also added some weight to the space as we moved through the day.
• Later in the day current Richmond Fed President Barkin noted that it could take a minimum of several months for the Fed to understand if high inflation & labour shortages will eventually ease or become stickier.
• Asia-Pac hours will be headlined by the heavily awaited Biden-Xi phone call, although comments from White House officials over recent days have tempered expectations for any meaningful progress re: Sino-U.S. relations. Tuesday's domestic docket will be headlined by retail sales data, with industrial production, business inventories & NAHB housing data also due. Tuesday will also bring a deluge of Fedspeak, with Bullard, Barkin, Bostic, George & Daly all due to make addresses.