Narrow Overnight, Steeper At The Margin

U.S. Tsys traded unchanged to lower during the bulk of Asia-Pac hours, with the PBoC's latest round of liquidity injections and a message from China's chief diplomat, Yang Jiechi, pointing to the potential for a more constructive Sino-U.S. relationship, albeit with the usual caveats surrounding well defined flash points, seemingly supporting broader risk appetite. Elsewhere, some took solace from after-hours losses for U.S. retail favourite equity name GME and the Biden administrations re-affirmation that it wanted to provide sizeable stimulus in the wake of a meeting with 10 GOP Senators, flagging shortcomings within their smaller proposal. T-Notes trading -0-02 at 137-04 last, with the spillover from the latest RBA decision seeing the contract away from lows in the middle of the session, although the contract stuck to a 0-03+ range overnight. Cash little changed across the curve, with some twist steepening seen as 30s run 1.0bp cheaper on the day.

• As a reminder, the Tsy curve steepened a touch on Monday, with 30s finishing 2.5bp cheaper on the day, while T-Notes closed off worst levels as weather conditions on the east coast seemed to limit participation. The Treasury's latest round of borrowing estimates were lower than expected, although this is largely attributable to the cash on hand that the Treasury has/projections of a more aggressive drawdown than many expected on that front and the absence of additional fiscal stimulus within the projections. Notable corporate issuance came in the form of a $14bn multi-tranche round from Apple, while Altria followed that up with a $5.5bn multi-tranche, helping apply pressure to the long end.
• Fedspeak from Mester & Kaplan headlines locally on Tuesday.