Not Quite $2.0tn, What Will Congress Think?

T-Notes operating around the lower boundary of Thursday's range after the re-open, last dealing unchanged at 136-18.

• Speculation surrounding President-elect Biden's stimulus plan ultimately pressured the space on Thursday, with the $1.9tn plan outline delivered during the NY-Asia crossover. There were no real surprises in the release given the amount of source reports circulating beforehand, but the package was ever so slightly smaller than the $2.0tn touted in yesterday's Asia-Pac session. Now we shall see how many of the moderate Democrats support the package and if it needs to watered down to pass through Congress (note that Biden has previously stated that he would prefer bipartisan support of the package, as opposed to having to force the scheme through via reconciliation procedures in the Senate). T-Notes went out around late lows, while the cash curve bear steepened as 30 cheapened by ~5.5bp come the bell.
• Thursday also saw Fed Chair Powell reaffirm the broader understanding of the AIT framework, while he noted that the Fed will not hike rates just to ward off theoretical inflation threats. He also stated that the central bank would "of course be very, very transparent" and flag any potential tapering of their asset purchase programs well in advance, while stressing that now is not the time for taper discussions and that the Fed does not want to exit asset purchases "too early." Powell's comments helped stall the aforementioned pressure for Tsys, before the softening resumed, aided by 2x FV block sales.
• Tsys had seen some early support on the back of strength in Bunds which was linked to the political issues seen in Italy.
• A reminder that Biden will make an address at in around an hour (00:15 London/19:15 NY).