Flat Start

T-Notes marginally lower to start the week after finishing Friday's session a touch shy of best levels, last printing unchanged vs. settlement at 134-04+.

• Weekend headline flow was dominated by less than warm tones ahead of Monday's meeting between Chinese & U.S. officials (including U.S. Deputy Secretary of State Sherman, as well as Chinese Foreign Minister Wang Yi and Vice Foreign Minister Xie Fen) and the Chinese clampdown surrounding profits and equity market listings in the education sector.
• As a reminder, the major cash Tsy benchmarks finished Friday's session little changed to ~1.0bp richer, while the widening in breakevens drove our weighted U.S. real yield metric to fresh all-time lows. Broader price action was limited with the impending event risk and lack of a catalyst (as well as a Japanese holiday thinning volume in Asia) weighing on activity. Outside of the ongoing infrastructure saga, comments on the debt ceiling garnered some interest, with U.S. Tsy Sec Yellen noting that "if Congress has not acted to suspend or increase the debt limit by Monday, August 2, 2021, Treasury will need to start taking certain additional extraordinary measures in order to prevent the United States from defaulting on its obligations." Flow was dominated by 2x block buys of UXY futures during NY hours (+5.0K and +3.9K).
• There is a lack of tier 1 headline risk slated for Asia-Pac hours. New home sales & Dallas Fed m'fing activity data headline the local docket during NY hours on Monday, although participants are clearly focused on the upcoming FOMC decision (Wednesday) and advance Q2 GDP reading (Thursday).