Narrow In Asia

U.S. Tsys experienced relatively sedate Asia-Pac trade, with macro headline flow on the lighter side, leaving T-Notes to operate in a narrow 0-03+ range, last -0-01 at 136-29, while cash Tsys sit within 1.0bp of closing levels, biased ever so slightly cheaper on the day. Pockets of TY selling were seen, although it was a 10K block of the TYJ1 138.00/133.50 risk reversal, selling the calls to buy the puts that caught the eye (with that particular round of flow going against the broader mantra of recent regional block trades i.e. selling TYH1 puts to buy TYH1 calls, albeit at a slightly longer maturity). Eurodollar futures trade +0.5 to -0.5 through the reds. Once again, pockets of selling caught the eye here, with EDH1, EDM1 & EDZ2 given at different times.

• Cash Tsys unwound most of their early cheapening as we moved through Tuesday's session, with the curve showing very marginal twist steepening come the bell. The movement wasn't one way, with some chop seen over Janet Yellen's appearance ahead of the Senate Finance Committee as she noted that she was open to considerations surrounding the issuance of 50-Year Tsys. Yellen noted that "there is an advantage to funding the debt, especially when interest rates are very low, by issuing long-term debt." Still, Treasury has only recently re-introduced 20-Year Tsy auctions, and several sell side notes have suggested that 50-Year issuance doesn't provide a good fit with Treasury's debt management goals, at least against the current backdrop.
• 20-Year Tsy supply and President-elect Biden's inauguration headline locally on Wednesday.