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AUSSIE 3-YEAR TECHS

(H2) Fading End-2021 Strength

ASIA

Coming up in the Asia-Pac session on Tuesday:

USDCAD TECHS

Corrective Bounce

AUDUSD TECHS

Bearish Threat Following Friday’s Sell-Off

EURJPY TECHS

Finds Support Below The 50-Day EMA

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Mkts still skittish to Omicron/Covid variant related headlines that sent bond soaring last Friday. Rates rebounded on the Asia session open, pared gains and held narrow range into early London trade.
  • Otherwise the Tsy week opener was rather muted on light volume (TYZ1 <875k) w/ some desks still lightly staffed after Thanksgiving holiday. Tsys extended lows (30YY 1.9087%H) back to around the middle of Fri's range -- rebounded after mixed data: Pending Home Sales +7.5% vs. 1.0% exp; Dallas Fed Mfg 11.8 vs. 15.0 exp.
  • Sources report domestic Real$ acct buying in 10s pick up after central bank buying in 5s and 10s earlier, not to mention over 21,000 Block buys in FVF from 121-02 to 121-07.
  • Buying waned: Yield curves held steeper as support for 5s-10s evaporated, equities making new session highs (ESZ1 +74.0 to 4469.75) after Pres Biden ruled out lockdowns this winter to combat spd of Omicron-Covid variant.
  • Fed Chairman Powell spoke briefly today/gives testimony on CARES Act with Tsy Sec Yellen on Tue-Wed, unlikely much will be conveyed to upset markets prior to Fed media/policy blackout that starts Midnight Friday, final 2021 FOMC annc on Dec 14-15.
  • The 2-Yr yield is up 1.8bps at 0.5157%, 5-Yr is up 2.7bps at 1.1871%, 10-Yr is up 5.5bps at 1.5277%, and 30-Yr is up 5.5bps at 1.8764%.