Little Changed In Asia After Recent Swings

T-Notes traded either side of their late NY levels during Asia-Pac hours, with little in the way of market moving headlines witnessed, which went alongside relatively sedate core market trade as China returned from the LNY break. T-Notes last +0-04+ at 135-28+ on healthy volume of ~190K, with cash Tsys sitting unchanged to marginally cheaper on the day. The latest round of vaccine related headline flow (which was negative at first glance, although some of the details were a little more upbeat) saw no tangible market reaction. The uptick from yesterday's lows resulted in some downside interest in Asia-Pac hours, with the TYJ1 134.50/133.50 put spread lifted via a 3.0K block trade. We also saw a FV/TY flattener block (3,630 FVH1 vs. 2,260 TYH1). Eurodollar futures print unch. to 1.5 ticks higher through the reds, with a sizable 50K screen buyer of EDZ2 seen in Asia-Pac hours.

• As a refresher, the space richened on Wednesday with the retracement from intraday cheaps playing out during NY hours. The move wasn't data driven (in a traditional sense) and may reflect the notion that the recent cheapening/steepening, evident across the bulk of major global FI markets, has simply gone too far, too fast (at least in terms of recent history). While the stronger than expected local data releases (headlined by retail sales and PPI) had some suggesting that fiscal support may not need to be quite as aggressive as touted by the Biden admin. The curve bull flattened in the main, although 20s saw some marginal underperformance on the back of a soft round of 20-Year supply from the U.S. Tsy. The auction tailed by a little over 2.0bp, with the cover ratio sliding to below average levels as dealer participation picked up. There was nothing in the way of a notable reaction to minutes from the latest FOMC decision, with no major surprises witnessed. On the flow side, a couple of block buys in WNH1 also helped underscore the flattening theme on Wednesday.
• Weekly jobless claims, housing starts & building permits data, the latest Philly Fed business survey, Fedspeak from Brainard & Bostic, 30-Year TIPS supply and the Tsy announcement re: end-of-month issuance headline on Thursday.