Supported By Tsy-Fed Tussle

T-Notes last deal at 138-15+, +0-04 on the day, a little off of best levels as S&P 500 e-minis failed to pierce Thursday's low, while the cash curve has witnessed modest twist flattening. The impact from the U.S. Tsy's request for the Fed to return unused funds that were provided for support schemes/a push to unwind some of the facilities at least partially moderated, although the contract never got back to unchanged levels vs. settlement, while the Fed has shown disagreement re: the request. There has been little of any real note on the headline front during Asia-Pac hours, with market flow centring on the downside TY option plays that were similar to flows seen during the timezone during the earlier part of the week. There was a 10K block buy of the TYG1 136.50/135.50 put spread vs. selling of the TYF1 139.50 calls. There was also ~4.5K of the TYG1 137.50/136.50 bought on screen, this time against the TYG1 139.50 calls.

• Thursday saw Cash Tsys bull flattened into the close, on the back of the Tsy/Fed tussle, with 30s going out ~5.5bp richer on the day. Familiar matters had been in play during NY hours, with a focus on the U.S. COVID situation, vaccine developments and parties in DC preparing to come back to the table re: fiscal support discussions. Further mobility restrictions were outlined in the states of California & Ohio since the closing bell in NY.
• Friday will be headlined by Fedspeak from Kaplan, Bostic, Barking & George.