Positive Trade Mood Music Provides Light Pressure Overnight

The broader risk-on feel, spilling over from NY hours, before building on the back of warm enough tones surrounding the Sino-U.S. phase 1 trade deal phone call, only applied limited pressure to the U.S. Tsy space in overnight trade. A ~10.0K screen seller of T-Notes helped the contract to worst levels, although the broader range was generally contained. The downside focus was also witnessed elsewhere on the flow side, with a 5.3K block buyer of the TYV0 137.00 puts seen. FV & TY roll activity was also observed. T-Notes last -0-03 at 139-13+, holding a 0-04+ range, while cash yields sit 0.3-0.7bp cheaper across the curve.

• A reminder that Monday saw the early bid in the space give way as we moved through NY trade, with equities grinding higher, tracking the path of least resistance, while some pointed to weekend COVID-19 treatment developments/reports and Friday's BBG story suggesting that the Trump administration is privately seeking to reassure U.S. companies that they can still do business with the WeChat messaging app in China as risk supportive factors. Prevailing ranges in the Tsy space were tight. Marginal underperformance in the 7-10 Year sector was evident on Monday, with the space looking to this week's supply schedule (headlined by 2-, 5- & 7-Year issuance). The long end wasn't quite as soft as the aforementioned sector, perhaps aided by some light focus on month-end flow dynamics.
• Focus today falls on the aforementioned round of 2-Year supply, an address from Fed's Daly and confidence index/housing market data.