Narrow Overnight

Core FI markets sit little changed to a touch firmer in Asia-Pac hours, with the recent supply burden in U.S. Tsys & ACGBs now in the rear-view mirror. A couple of pockets of TYM1 screen buying helped support the broader U.S. Tsy space in early Asia dealing, although T-Notes have moved away from best levels to last print unchanged on the day, sitting at 132-02+ (operating in a 0-04 range), while cash Tsys sit within ~0.5bp of settlement levels, running marginally cheaper across the curve into European hours.

• Asa a reminder, the space firmed on Tuesday, with the 7- to 10-Year zone outperforming, as that zone of the curve richened by ~5.0bp. Early headline flow was dominated by news that the U.S. FDA & CDC recommended pausing the use of J&J's COVID-19 vaccine in the wake of rare cases of blood clotting in women after use of the vaccine. Still, this shouldn't have much in the way of an ultimate impact on the broader pace of the U.S. vaccination schedule, with Pfizer's CEO noting that the company is on pace to complete the U.S. order of 300mn doses of its vaccine by the end of July, 2 weeks ahead of schedule. The Pfizer chief also noted that the company could provide a 10% lift in supply come the end of May vs. the original agreement. More recent headlines have noted that J&J will proactively delay the rollout of the vaccine in Europe and pause all of its COVID vaccine related clinical trials. The impulse from the J&J headline flow easily outweighed any impact from a marginally stronger than expected round of U.S. CPI data. Meanwhile, the latest round of 30-Year Tsy issuance stopped through WI by a little over 1.5bp, with strong internals revealing a slide in dealer participation to below average levels, while the cover ratio nudged higher. The Fed failed to provide any tweaks in the release of its Tsy purchase schedule, which saw 20s cheapen by a little over 2bp on the 10-/20-/30-Year fly come Tuesday's close, after last week's comments from SOMA chief Logan flagged the potential for an increase ("minor technical adjustments") in 20-Year purchases "over the coming months."
• Wednesday presents another slew of Fedpseak, headline by comments from Chair Powell.