TYZ1 Holds Most Of Friday's Gains

TYZ1 off late NY highs at the re-open, last +0-03+ at 130-14+. The weekend saw Tsy Sec Yellen note that she exp. inflation to remain high through H122, while playing down worry of a loss of control when it comes to inflation. Elsewhere, recent headlines have pointed to progress in the fiscal back and forth amongst Democrats on the Hill.

• To recap, U.S. Tsys firmed on Friday, with 2s little changed and 30s over 7.0bp richer on the day, with bull flattening at the fore in NY hours. Fed Chair Powell stuck to script when it came to the end game re: inflation (even with plenty of uncertainty evident re: the latter, noting that such pressures are likely to last longer than prev. exp.), despite a surge in market rate hike pricing. Still, Powell did note that the Fed would hike rates if serious risks of higher inflation expectations become evident, although he once again played down the need for anything like an imminent rate hike. 2s initially cheapened on the comments, before easing back to unchanged levels as the long end richened into the bell. Some Brexit uncertainty also supported the space into the bell. This meant that 10s failed to challenge the mid-May highs (in yield terms), which were tested on Thursday.
• There isn't anything in the way of tier 1 risk events slated early this week. Matters in China may get some attention, with greater localised COVID restrictions seen in some areas (including Beijing), alongside warnings that case numbers are set to rise in the coming days. Elsewhere, a pilot property tax scheme was outlined by Chinese state-owned media over the weekend.
• Regional Fed m'fing indices headline during NY hours on Monday, with the Fed now in its pre-meeting blackout.