Tight Overnight After Monday's Recovery

T-Notes stuck to a narrow 0-02+ range in Asia-Pac hours, last +0-00+ at 138-03, with cash Tsys sitting unchanged to 1.0bp richer across the curve, as the long end sees some marginal outperformance.

• The space has shrugged off the release of the latest round of Chinese economic activity data, PBoC MLF activity and comments from U.S. Senate Majority Leader McConnell as he re-affirmed the need for Congress to bridge its differences and come to a deal re: fiscal support before Christmas (this isn't new and McConnell has maintained his well-defined red lines re: the matter in recent days). Overnight flow was headlined by a block trade which saw 10K of the TYG1 137.00/136.50 put spread bought vs. TYG1 139.50 calls, with the package trading at -0-01.
• As a reminder, Monday saw Tsys recover from their intraday cheaps as we moved through NY trade, with the continued fiscal impasse in DC and the COVID-related worry in London & New York driving the unwind of the early risk-positive price action. The curve saw the most marginal degree of twist steepening, with 30s virtually unchanged on the day come the bell. Monday's flow was dominated by a 5.5K buyer of the USH1 169.00/165.00 put spread, which crossed on screen in the NY afternoon.
• The empire manufacturing survey and industrial production/capacity utilisation readings headline locally on Tuesday.