Tight In Asia, Job Market Data Eyed

T-Notes are unchanged at 131-30 at typing, holding to a narrow 0-02+ range overnight, on volume of ~46K. Headline flow remains light. Cash Tsys are little changed to 0.5bp cheaper across the curve. Eurodollar futures trade -0.25 to +1.0 through the reds. Flow has been headlined by downside interest in EDZ3 via the options space, which saw 5.5K of the 2EZ1 99.000/98.875 put spread trade vs. the 2EZ1 99.250/99.375 call spread, with a market contact pointing to buying of the put spread vs. selling of the call spread.

• T-Notes went out just shy of best levels on Wednesday, sticking to a narrow range. Tsys were little changed to a touch firmer across the curve, running flat to 2.0bp richer come the bell, with 10s outperforming at the margin. The bid stemmed from a rally in European bond markets, although firmer oil prices likely limited the move. A pullback from best levels in U.S. equities provided another source of support as we moved through the day. Early NY block flow included a 3.5K seller of UXYU1 and a FVU1/WNU1 steepener (+19K vs. -2.95K). The release of the Fed's beige book did little for the market, confirming prior thoughts re: inflation and bottlenecks. Elsewhere, Fed's Harker continued to present himself at the hawkish end of the spectrum. Finally, the Fed "announced plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility (SMCCF)"…"SMCCF portfolio sales will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds." The central bank's entire portfolio will be off the balance sheet by the end of '21, a Fed official said.
• Thursday's domestic focus is set to fall on labour market data (weekly claims & ADP employment) ahead of Friday's NFP print, with the latest ISM services survey and a raft of Fedspeak also due.