Plenty To Assess

T-Notes operating a touch shy of Friday's late NY levels, last +0-02+ at 134-17.

• To recap, the belly led the rally on the cash Tsy curve on Friday, with the 5- to 10-Year zone richening by ~4.5bp on the day. A downtick in the equity space aided the bid, with T-Notes moving back to best levels late in the NY day as the usual month-end extension rebalancing (16:00 NY/21:00 London) provided modest support (the extension estimate was a shade below the 12-month average) after some light downward pressure was witnessed around the cash Tsy settlement period. FV futures flow headlined on the day, with a block seller (-9.3K, $475 DV01 equivalent), which was followed up by a block buyer (+8.36K lots, $427K DV01 equivalent). Elsewhere, screen lifting of TYU1 133.50 puts were observed.
• The weekend saw a slightly slower than exp. rate of expansion printed in China's headline official m'fing PMI print. Elsewhere, some questions over the efficacy of COVID vaccines is becoming apparent, centring on developments in Israel, which will likely result in broader calls for the deployment of booster shots. Also, in light of last week's regulatory wrangling surrounding the Chinese equity space, the weekend saw China's CSRC call for deeper communication with the U.S. SEC re: IPOs.
• Late on Friday Fed Governor Brainard noted that she will be more confident in assessing the rate of progress in the economy once data is in hand for September, adding that the labor market has some distance to go until it meets the central bank's goals. Sunday saw Minneapolis Fed President Kashkari ('23 voter) underscore the possibility that the delta variant of COVID-19 may harm the labour market and therefore the U.S. economic recovery.
• On the fiscal front, the U.S. Senate is set to vote on the bipartisan infrastructure package "in a matter of days," per Senate Majority Leader Schumer.
• The latest Chinese Caixin m'fing PMI print headlines the broader Asia-Pac docket on Monday. Looking to Monday's NY docket, it will be the ISM m'fing survey that headlines on the data front.