Off Lows, But Still Cheaper Than Friday's Levels Ahead Of NY Return

T-Notes stuck to a 0-05+ range in Asia-Pac hours, last -0-07+ vs. Friday's settlement, printing at 136-10. 10s present the weak point on the cash curve after the elongated weekend, trading a little over 2.0bp cheaper on the day. T-Notes have nudged higher in recent trade, with the move coming on the back of an FT article re: China exploring whether it can hurt US defence contractors by limiting the export of rare earth minerals is denting risk appetite a little.

• A TU/FV flattener block (14K vs. 10K) provided the highlight on the flow side overnight. Elsewhere, block flow saw 2x 1875 lot buyers of the TYJ1 134.00 puts, while there was a 2.5K lot block seller of the USH1 164.50 puts.
• As a reminder, T-Notes managed to stabilise a little above their Asia-Pac lows in holiday-thinned trade on Monday, after the contract traded heavily from the Sunday re-open, with the reflation trade narrative in play. Surging crude oil prices kept a lid on any upward impetus that bulls may have looked to generate, as did the broader bid in equity markets. There was little to really move the needle in terms of fundamental macro headline flow, with most of the focus on the cold snap in the U.S. and the energy market gyrations that followed. Volumes were active enough given the U.S. holiday, which kept cash markets closed on Monday, although still subdued in the grand scheme of things. A 60K block buyer of the TYJ1 138.00 calls and 10K block seller of TYJ1 133.00 puts was seen during Monday's London morning, providing the highlight on the flow side on the day, and seemed to represent covering of existing positions.
• A raft of Fedspeak headlines the U.S. docket on Tuesday, with nothing in the way of tier one market movers scheduled for release during Asia-Pac hours.