Modestly Cheaper Overnight

The broader risk-positive move, aided by the realisation of and expectations re: further easing from within the Chinese policymaking sphere, in addition to some post-RBA spill over from the ACGB space, weighed on U.S. Tsys in Asia. TYH2 -0-03 at 130-18 as a result, 0-01+ off recent session lows, with cash Tsys running 1.0-1.5bp cheaper across the curve, led by the belly. A 6K FV futures block sale (the second instance of such flow in as many Asia-Pac sessions) aided the momentum.

• Cautious optimism re: omicron pressured the U.S. Tsy space on Monday, with the bearish impulse extending as we moved through the day, steepening the curve. 2s were ~4.5bp cheaper come the bell, while 30s were ~10bp cheaper on the day. Firmer equities and crude prices fed into the weakness. $-denominated IG issuance also applied pressure, with swap spreads widening on the back of that dynamic, suggesting payside flows in the swap space added to the broader Tsy weakness. On the flow side, the NY morning saw a TU/UXY block steepener (+14,000/-4,700), which also added momentum.
• 3-Year Tsy supply headlines the local docket on Tuesday, with final Q3 productivity and unit labour costs, as well as the monthly trade balance and consumer credit readings also due.