Talk Of Large Fiscal Impulse Pressures, Clarida Comments Raise Eyebrows

Asia-Pac hours saw T-Notes trade 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 ~3.0bp cheaper vs. closing levels.

• Wednesday saw T-Notes recover from intraday cheaps during NY trade, with a very strong 30-Year Tsy auction adding to the impetus later in the day (and also adding to the strong 10-Year auction seen on Tuesday), before the contract finished a little shy of best levels. In terms of auction specifics, 30-Year supply stopped through WI by 1.4bp, with above recent avg. cover as direct and indirect participation moved higher, allowing dealer participation to crater to well below recent average levels. The curve bull flattened as a result, with 30s richening by 5.5bp on the day. Elsewhere, Fedspeak (including Brainard & Clarida) continued to push the central economic outlook. With nothing in the way of urgency flagged re: the prospect of a tapering discussion. Meanwhile Clarida caught most off guard as he noted that there will not be a rate hike until the U.S. sees inflation of at least 2.0% for a year, per BBG.
• Weekly claims data, a raft of Fedspeak (including comments from Chair Powell) and Biden's aforementioned address headline the U.S. slate on Thursday.