Talk Of A Larger Than Expected U.S. Fiscal Impulse

T-Notes traded to fresh session lows on the back of a CNN source piece suggesting that U.S. President-elect Biden could table a $2tn COVID relief package later today, which would provide a larger than expected fiscal impulse for the U.S. The contract is last -0-06 at 136-18+. Biden will present his plan on Thursday evening, with the CNN piece noting that "the Biden team is taking a "shoot for the moon" approach with this package, one lawmaker in close contact with them told CNN, though they added that the price tag could still change." The curve bear steepened on the story, with 30s now sitting 2.5bp cheaper vs. closing levels.

• JGB futures also softened on the chatter surrounding the U.S. fiscal impulse, with futures now -2 on the day, a little off lows. Yields are mixed in the cash space, with the long end experiencing some light outperformance in the main. A quick look at the latest round of 1-3 & 25+ Year BoJ Rinban ops (which saw the purchase sizes left unchanged) revealed little movement in the offer to cover ratios vs. prev.
• The Aussie curve unwound its early flattening to sit near unchanged vs. yesterday's settlement levels on the back of the previously flagged Biden stimulus plan chatter, with YM & XM both +0.5. This comes after the latter firstly consolidated and then marginally extended on overnight gains in early Sydney trade. Swaps are wider vs. cash ACGBs across most of the curve, with cash ACGBs showing some light twist steepening. Local news flow has been light.