T-Notes Tight, Cash Closed Until London Hours

T-Notes have stuck to a narrow 0-04 range in Asia-Pac hours, last dealing -0-00+ at 134-03. A quick reminder that cash Tsys are closed until London hours owing to a Japanese holiday (the same will hold true on Friday). The Japanese holiday has also limited broader volume, with ~50K T-Notes changing hands thus far. There hasn't been much in the way of notable headline flow, although U.S. President Biden flagged the potential for COVID vaccinations for children under 12 in the coming weeks/months. Elsewhere, the Washington Post has suggested that White House officials "are debating whether they should urge vaccinated Americans to wear masks in more settings as the delta variant causes spikes in coronavirus infections across the country." We also saw Biden reaffirm his views on inflation & the labour market.

• A reminder that the 7+-Year zone of the cash Tsy curve led the cheapening on Wednesday, with yields in that zone of the curve rising by ~6.5bp on the day, resulting in bear steepening of the curve. The space has unwound virtually all of the richening seen on Monday, after higher European equities/e-minis and a soft lead from EGBs provided the momentum into NY hours (in addition to 16,186 lots of TYU1 sold across 3 block trades during European and early NY dealing). 20-Year Tsy supply saw a 1.2bp tail, with dealer takedown recovering from last month's record lows, but holding below the recent average. Meanwhile, the cover ratio softened marginally, moving back to its own recent average. Late NY headline flow saw the GOP vote down the bipartisan "hard" infrastructure package, although this is expected to be revisited in the coming days (most likely on Monday). Elsewhere, there was confirmation that U.S. Deputy Sec. of State Sherman will visit China on July 25-26, bringing an end to the speculation/comments surrounding the matter in recent weeks.
• The latest ECB decision and press conference will provide some interest early in the NY session (given Lagarde's recent comments on forward guidance). Domestic focus will fall on the weekly jobless claims data, some of the regional Fed activity indices & 10-Year TIPS supply.