Tight Overnight After 20s Provided The Weak Point On Monday

News flow was light at best during Asia-Pac hours, with commentary from Dallas Fed President Kaplan ultimately revealing nothing in the way of fresh information. T-Notes last -0-01 at 132-10, sticking to the confines of a 0-03 range, with cash Tsy yields virtually unchanged across the curve.

• This comes after the contract went out at worst levels of the day on Monday, with the majority of the 5+-Year benchmarks on the cash Tsy curve cheapening by ~2.0bp. 20s were the exception to the rule, cheapening by ~4.0bp come the close, as a heavy offer to cover ratio and less pronounced round of 20-Year buying were seen in the Fed's newly defined 10- to 22.5-Year Tsy purchase operation. For the record, 20s have now cheapened by ~10bp on the 10-/20-/30-Year fly over the past month or so. The offer to cover ratio may have also been influenced by the proximity to Wednesday's 20-Year Tsy auction.
• Building permits and housing starts data headlines the local economic docket on Tuesday. Elsewhere, we will hear from Dallas Fed President Kaplan. There will also be some focus on goings on in Washington DC, with a group of GOP Senators scheduled to table their latest counterproposal to President Biden's infrastructure spending plan, although it isn't clear if the GOP plan will be finalised ahead of the meeting.