Simmering U.S.-Iran tensions supported......>

US TSYS: Simmering U.S.-Iran tensions supported the space in Asia hours, with a

disappointing round of China Caixin PMI data also helping. However, the contract

has eased from extremes, with participants seemingly happy to fade the move on

the back of a lack of any hard line retaliatory strikes from Iran over the

weekend. T-Notes +0-05+ at 129-18, with yields 0.8-2.3bp lower across the curve.

Fed Funds futures were active (for the time zone) after the release of the Fed's

Dec meeting minutes revealed that the NY Fed recommended raising the IOER at

some point. Comments made in the minutes surrounding the foreign repo pool and

discussions re: buying coupon bearing Tsys "under some conditions" also drew

interest. Also worth noting that the minutes stated that "the calendar of repo

operations starting in mid-January could reflect a gradual reduction in active

repo ops. The manager indicated that some repos might be needed at least through

April, when tax payments will sharply reduce reserve levels." Sunday saw Fed's

Williams note that "it is important for Fed officials to hold themselves

accountable to their 2% inflation target."

- Thin docket Monday, Markit svcs & comp. PMIs (f), 3- & 6-Month bill supply.