Tight After Month-End & Fedspeak Dominated On Monday

T-Notes holding a tight range in early Asia-Pac dealing, last -0-03 at 139-05 after sizable month-end extensions helped the space away from session lows on Monday, with late NY trade being subjected to the traditional choppy action usually observed on the final trading day of the month. Cash trade saw the curve bull flatten come the bell.

• London's holiday-induced closure limited broader activity.
• Fedspeak dominated on the headline side.
• Vice Chair Clarida noted that "inflation that averages 2 percent over time represents an ex ante aspiration, not a description of a mechanical reaction function-nor is it a commitment to conduct monetary policy tethered to any particular formula or rule." He went on to stress that the impact of YCC "may be modest" in terms of benefits but remains an option that the Fed could reassess in the future if circumstances changed markedly.
• Elsewhere, a paper co-authored by San Francisco Fed President Daly noted that U.S. wage growth will be sapped through the Covid-19 recovery because gains during the pandemic have been badly overstated by low-wage workers bearing the brunt of layoffs.
• The fiscal impasse on the Hill continues, as flagged in earlier bullets
• Eurodollar futures sit unchanged to -0.5 through the reds.
• Eyes on regional PMI data in Asia-Pac hours.