Under Pressure

The combination of spill over from ACGB trade and regional reaction to Tuesday's cheapening in U.S. Tsys is likely providing some modest pressure to the U.S. Tsy space in early Asia-Pac trade, leaving T-Notes 0-04 lower on the day at typing, printing 131-19+, looking through Tuesday's low. Early cash Tsy trade has seen some bear steepening, with 20s representing the weak point on the curve, cheapening by 1.5bp vs. NY closing levels. Elsewhere, 30-Year yields have hit the highest level seen since June in early Asia trade. A slight moderation in Sino-U.S. tensions could also be feeding into price action here, with President Biden recently highlighting a conversation with Chinese counterpart Xi, which saw the two leaders agreeing to abide by the Taiwan agreement.