Mixed Overnight Vs. A Positive Risk Backdrop

Technical breaks and supportive flows from China fed into an extension of the recent leg higher in the Hang Seng, fuelling broader risk-on flows across wider financial markets. Elsewhere, some looked with hope towards Janet Yellen's Tuesday testimony on the Hill, pointing to previous comments during her time as the FOMC Chair, suggesting that she will have no qualms re: running the economy hot for a time if deemed necessary (albeit from a fiscal standpoint). Elsewhere, China's state planning body flagged no sharp turns in the nation's macro policies during '21.

• This backdrop pressured Tsys during a session that was devoid of major macro headline flow, with 1.0-2.0K clip sellers of TYH1 futures at the fore on the flow front. T-Notes -0-05 at 136-22+ at typing, 0-01+ off lows, while the cash Tsy curve has bear steepened, with 30s sitting ~3.0bp cheaper on the day. Eurodollar futures sit unchanged to -1.0 through the reds, with a 5.0K lift of EDM4/Z4 providing the highlight on the flow front.
• JGB futures held to a narrow range in morning trade, before extending higher during afternoon trade, +8 ticks last. Cash trade saw some outperformance for the super long end, although 20s hovered around unchanged levels. The latest round of 20-Year JGB supply wasn't as soft as December's 20-Year JGB auction, but wasn't strong by any stretch of the imagination. Still, a sense of relief re: the auction not being as bad as December's offering may have allowed futures to rally during afternoon trade.
• The broader environment applied light pressure to the Aussie bond space, with YM -0.5 and XM -2.5 at typing, with A$ issuance likely adding further weight to the space.