Softer Ahead Of Yellen

Technical breaks and supportive flows from China fed into an extension of the recent leg higher in the Hang Seng, fuelling broader risk-on flows across wider financial markets, although the broader risk positive mood has edged away from the overnight extremes ahead of European hours. Elsewhere, some looked with hope towards Janet Yellen's Tuesday testimony on the Hill, pointing to previous comments during her time as the FOMC Chair, suggesting that she will have no qualms re: running the economy hot for a time if deemed necessary (albeit from a fiscal standpoint this time around). Elsewhere, China's state planning body flagged no sharp turns in the nation's macro policies during '21.

• This backdrop pressured Tsys during a session that was devoid of major macro headline flow, with 1.0-2.0K clip sellers of TYH1 futures at the fore on the flow front. T-Notes -0-04 at 136-23+ at typing, 0-02+ off lows, while the cash Tsy curve has bear steepened, with 30s sitting ~2.5bp cheaper on the day. Eurodollar futures sit unchanged to -1.0 through the reds, with a 5.0K lift of EDM4/Z4 providing the highlight on the flow front.
• As a reminder, T-Notes meandered along in very limited, holiday-shortened, liquidity-thinned Monday trade, finishing the session little changed after ticking away from Asia/early Europe highs, with the modest uptick in German yields filtering through. There was a lack of notable macro headline drivers during European trade, after a slightly defensive start to the week in Asia.
• Yellen's aforementioned address headlines locally on Tuesday.