Cheaper Vs. Close, Off Asia Lows. Fedspeak & 3-Year Supply Eyed.

Asia-Pac hours saw core fixed income markets pressured by the trifecta of higher oil prices, a wider than expected Chinese trade surplus (firmer than exp. exports & softer than exp. imports), as well as the passage of the Build Back Better and infrastructure spending plans in the U.S. on Friday.

• A round of TYZ1 lifts (4K block and ~3K subsequently on screen) helped the Tsy space find a bit of a base mid-way through the Asia-Pac session. TYZ1 runs -0-05+ at 131-21 at typing, off lows and within the confines of 0-06+ overnight range, while the major cash Tsy benchmarks sit 0.5-2.0bp cheaper across the curve.
• A quick reminder that Friday's rally in the space came in the wake of a better than expected round of U.S. labour market data. The data was largely ignored, as positioning dynamics/FOMC repricing came to the fore (BoE repricing also continued to garner interest/result in cross-market reaction), while the bump higher in oil prices (up over $2 vs. Thursday's close) also had little impact. The curve bull flattened, with 2s 2.5bp richer and 30s 7.5bp richer come the bell.
• A raft of Fedspeak, headlined by Chair Powell & Vice Chair Clarida, in addition to 3-Year note supply from the Tsy, headline the local docket on Monday.