Fiscal Matters Dominate

Some optimistic words from U.S. Tsy Sec Mnuchin re: the prospect of a fiscal deal in the coming days has given some support to e-minis in early Asia-Pac trade, however, T-Notes have done little on the headlines, with the contract holding a 0-01+ range thus far, last -0-01+ at 139-15+, hovering within the lower end of Wednesday's range.

• Fiscal prospects dominated market sentiment on Wednesday, and the curve ultimately steepened on the day, although the space finished off intraday cheaps as Senate majority leader McConnell pushed back against the current proposal from the Democrats.
• Month-/quarter-end rebalances were also scrutinised, with some disappointing headlines on the COVID-19 vaccine timeline also in the mix (Moderna stressed that there will be no vaccine available before the U.S. Presidential election).
• Elsewhere, ADP labour market data and the Chicago PMI readings topped expectations, while a slew of Fedspeak did little for the market.
• Also worth flagging that the Fed extended the limitations imposed on bank dividends and equity buybacks, as expected, which will help promote liquidity over the year end "turn."
• The aforementioned round of notable holidays in the Asia-Pac region will suck liquidity from overnight trade, and will likely result in headline watching through to the London morning.