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AUSSIE 10-YEAR TECHS

(H2) Approaching The Key Bear Trigger

EURGBP TECHS

Fresh Multiyear Lows Once Again

STIR FUTURES

BLOCK: Large 3M SOFR Fly

AUSSIE 3-YEAR TECHS

(H2) Probes Key Support

COMMODITIES

Oil Ends A Mixed Day Softer

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The previously flagged sense of caution from the Moderna CEO re: the efficacy of the current crop of vaccines and imminent development of a suitable vaccine when it comes to fighting the Omicron COVID strain provided a bid for the core FI space ahead of European hours, after a generally lethargic round of early Asia trade.

  • U.S. Tsys were already in the process of unwinding their early cheapening (which came as e-minis nudged higher and Chinese official PMI data beat expectations). The aforementioned headline allowed TYH2 to push trough Monday’s high, last dealing +0-18+ at 130-27+, 0-03 off best levels. Cash trade sees the major Tsy benchmarks richen by 2.0-4.5 bp, with 7s leading the rally. House price data, consumer confidence and the latest MNI Chicago PMI reading headline the NY economic docket on Tuesday. Elsewhere, focus will fall on the Powell-Yellen testimony on the Hill (a reminder that Powell’s pre-released comments sounded a little more cautious vs. recent Fed rhetoric, owing to Omicron, meaning that focus will shift to the answers in the Q&A session).
  • JGB futures followed the broader ebb & flow and deal +19 ahead of the Tokyo close, with 7s leading the bid in the cash JGB space, pointing to a futures-driven move. 2-Year supply was easily absorbed. We saw comments from Japanese Finance Minister Suzuki, who flagged the government’s strong concerns re: the Omicron strain of COVID, pointing to the need for swift passage of the supplementary budget measures and stability in the FX market.
  • Aussie bond futures looked through local data, surging to best levels of the day on the broader risk-off move, before finishing off of highs (perhaps a case of fast money accounts/longs booking some quick profit ahead of the close). YM was +4.0, while XM was +5.5 at the bell.