Narrow Range Ahead Of The Supply Cycle & CPI

T-Notes little changed at the re-open, last dealing +0-01 at 132-04+.

• The contract stuck to a very narrow trading band on Monday, going out around the middle of its daily range as it consolidated the bulk of Friday's post-NFP rally. The broader Tsy space recovered from cheapest levels, aided by a downtick in the U.S. equity space (with some pointing to the G7 corporate tax accord as a headwind for the latter). That left benchmarks across the curve 1.0-2.0bp cheaper come the bell, with 20s providing the weakest point on the curve. A lack of movement on the fiscal front (GOP Senator Capito has stressed that the GOP is not going to present a further counter-offer to President Biden's fiscal spending proposals ahead of another meeting on Tuesday) and a subdued news backdrop left most looking to this week's Tsy auction cycle and corporate issuance slate. Still, the major rounds of market flow were focused on the belly of the curve, with a total of 20,965 FVU1 lifted on block throughout the NY session. Elsewhere, TY vol sellers continued to show their hands (with growing calls for short-term vol compression among the sell-side).
• There is little in the way of overt tier 1 risk slated for release during Tuesday's Asia-Pac session, while local U.S. focus will fall on 3-Year Tsy supply, and, to a lesser extent, NFIB small business optimism and JOLTS job openings data.