Move Lower In Equities Supports Ahead Of Heavy Supply

Global core fixed income markets caught a modest bid as we moved through Asia-Pac hours, with the downtick in the majority of the major equity indices (linked to geopolitical tensions and a huge antitrust fine for Alibaba in China, which dented broader sentiment even as the single name rallied) unwound some early supply related weakness. T-Notes last +0-01 at 131-24+, the cash curve seeing some light twist flattening, with almost all of the early, supply related cheapening (which was led by the belly) unwinding. Comments from Fed Chair Powell reflected the usual tinge of cautious optimism, albeit caveated with well-documented COVID-related risks and the need to continue to support the economy until the recovery "is complete." Headline flow was sparse. Market flow was headlined by a FV/US block steepener (+10.0K vs. -2.8K) and ~4.0K screen lift of the TYK1 130.25 puts.

• As a reminder, cash Tsys cheapened across the curve on Friday, with the 10-Year sector providing the weak point, softening by ~4.0bp come the bell. Data was headlined by a much stronger than expected round of PPI readings (along with delays to the release), with Fedspeak once again providing nothing meaningful for participants to digest. T-Notes recovered from post-PPI lows, aided by a round of TYM1 buying during the NY morning, going out around mid-range.
• 3- & 10-Year Tsy supply headline the local docket on Monday, with an address from Fed's Rosengren also due.