Futures Open Lower

TYH2 lower at the re-open, -0-04 at 128-05+, as Asia-Pac participants react to Friday’s market moves & news flow.

• Fiscal matters may also be playing into the move, with the weekend seeing House Speaker Pelosi note that there’s an “opportunity” to add federal COVID relief aid to the package that will fund the U.S. government. This was the latest round of commentary pointing to the potential for return of notable fiscal stimulus.
• A quick reminder that Japanese markets are closed today, as the country observes a national holiday. This will thin out liquidity in the Asia-Pac session and means that cash Tsys will not be upon until London hours.
• Weekend reports out of Cyprus pointed to COVID cases which indicated a combination of the Delta & Omicron strains. The scientist that made the discovery believes that the Omicron variant could displace “Deltacron,” while other quarters have suggested that contamination may have take place in the lab, resulting in the discovery of the “Deltacron” strain.
• To recap, solid undertones in the latest NFP report (despite a headline miss as NFPs printed at 199K vs. a median 450K), coupled with expectations for a continuation of brisk $IG supply in the coming week, weighed on the Tsy space on Friday. The space pulled away from session cheaps as we moved through NY trade, with the 1.80% level holding in 10-Year yields. Bear steepening of the curve was at the fore, with 2s little changed on the day, while 10+-Year paper was ~4bp cheaper on the day.
• There isn’t much of note on the U.S. docket on Monday, which may mean that any rumblings from the Russia-related discussions in Geneva may receive higher scrutiny.