No Let Up

Spillover from Friday trade and incrementally positive news flow surrounding the Pfizer COVID vaccine helped weigh on the Tsy complex in Asia-Pac hours, while comments from senior Chinese diplomats/ministers offered little new re: Sino-U.S. tensions/de-escalation. Weakness in T-Notes has taken the contract below downtrend support drawn off the August 28 low, with bears now looking to projections off the Jan 4-12 sell off vs. the Jan 27 high, layered in at 135-00 and 134-22. Contract last trades -0-10 at 135-04+, lows of 135-02 registered thus far, volume running at a very solid and above average ~430K (albeit artificially boosted by ~70K of roll activity). Longer dated yields marched to fresh cycle highs in Asia, with cash 7s & 10s trading the best part of 4.5bp cheaper on the day at typing. Flow wise, the highlight came in the form of TYJ1 1x2 134.50/133.50 put spread which saw 8.0K given via block.

• As a reminder, Friday trade saw 30s cheapen by a little over 5.0bp on the day, with bear steepening in play, aided by Democratic Senate leader Schumer pointing to the passage of the fiscal support package by mid-March. Longer dated U.S. Tsy yields tagged fresh cycle highs, with longer dated U.S. real yields bid (30-Year real yields punched and closed above 0.00% for the first time since June '20). The vaccine distribution/relative U.S. economic growth themes also played a part in the move.
• Fedspeak from Messrs Bowman & Kaplan is due on Monday, as are a couple of regional Fed economic activity indicators.