Marginally Cheaper In Asia

Core fixed income markets saw some modest cheapening in Asia-Pac hours, with a phone call between U.S. Tsy Sec Yellen & Chinese Vice Premier Liu He pointing to loose agreements re: the need for a certain degree of coordination between Sino & U.S. economic and political policy albeit with the U.S. airing some grievances) resulting in very modest risk-on price action. Elsewhere, Facebook's $50bn boost to its share buyback scheme supported the e-mini space in the early rounds of dealing.

• TYZ1 is -0-02 at 130-16 as a result, while cash Tsys run up to ~1.5bp cheaper across the curve, with the belly leading the downtick.
• To recap, the curve twist steepened around the 10-Year point on Monday, with 5s leading the richening witnessed, as yields there fell by ~2.5bp, while 30s cheapened by ~1.5bp. The front end didn't show much in the way of worry ahead of the impending round of 2-, 5- & 7-Year Tsy supply, due over the coming days, with FOMC hikes still front and centre when it comes to market pricing. Crude's rally supported breakevens, which were wider on the day, with the front end/belly leading that particular move, although that failed to spill over into the nominal space (as outlined above).
• Tuesday's NY dealing will be headlined by 2-Year Tsy supply. Elsewhere, new home sales data, the latest Richmond Fed m'fing survey and conference board consumer confidence print will hit. The fiscal back and forth within the Democratic Party continues, although several quarters have pointed to progress on that front.