U.S. Fiscal Matters Dominate Sources Of Risk

The start of the week has been dominated by broader focus on the prospects of a sizeable fiscal support package in the U.S., with Treasury Secretary Yellen and President Biden continuing to push home the need for notable assistance for the economy (although it looks like minimum wage hikes will have to wait, at least for now). The continued moderation in U.S. COVID cases is also helping risk-positive flows, although worry re: the spread of the UK strain of the virus around the U.S., in addition to issues pertaining to the efficacy of the Oxford/AstraZeneca vaccine in combatting the South African strain of the virus may be limiting broader follow through. Elsewhere, Sino-U.S. tensions are not expected to ease any time soon, especially on the back of the rhetoric provided by U.S. President Biden & Secretary of State Blinken over the weekend, although they will likely be on a more predictable and less spontaneous trajectory than what was seen during Donald Trump's term. Ultimately, the U.S. Tsy curve has been subjected to some bear steepening on the aforementioned fiscal matters, with 30-Year yields threatening to break above 2.00%, while S&P 500 e-minis had a very brief, and very limited look above the 3,900 mark, tagging a fresh all-time high in the process. T-Notes last -0-03+ at 136-18+, hovering just off worst levels of the day.

• Aussie bond futures were pressured by the broader dynamic witnessed in core FI, as well as some local semi issuance and reports from BBG which pointed to China allowing some stranded Australian coal cargoes onshore (although the broader import ban is set to remain in place). This leaves YM unchanged, with XM -7.0.
• JGB futures also fell afoul of the broader dynamic, with fresh cycle highs for 10-Year Japanese breakevens and super-long swap paying adding some local sources of pressure. JGB futures -16 ticks at typing.