Vaccines Vs. Restrictions

T-Notes nudge higher from the re-open, last +0-03+ at 138-09+.

• Wednesday saw markets continue to assess the balance of the near term economic hits from broader/deeper social mobility restrictions in the U.S. vs. the hope surrounding positive vaccine developments, which are more of a medium term consideration for now (while questions remaining broader distribution remain evident). The latest 20-Year Tsy auction was soft, with a 0.9bp tail seen, marginal uptick in dealer takedown and dip in the cover ratio. The auction saw T-Notes move to intraday cheaps, before the closure of NYC schools saw a correction from lows into the close. The belly of the curve underperformed in cash trade. Roll activity supported broader volume.
• Eurodollar futures run -0.25 tick to +0.5 tick through the reds. This comes after a particularly heavy volume session on Wednesday, which was driven by statements from both the IBA and FCA re: the future of LIBOR, with the ISDA noting that the comments from the IBA nor the FCA "constitute an index cessation event" under its protocols, therefore they will not trigger fallbacks or affect spread calculations. In summary, the IBA noted that it will "in the near future, consult on its intention" to stop publishing GBP, EUR, CHF & JPY LIBOR rates after December 31 '21. The fate of USD LIBOR remains under discussion. Meanwhile, the FCA noted that under proposed legislation it might "require continued publication of critical benchmarks on the basis of a changed methodology in certain circumstances." It also noted that probably wouldn't apply to EUR & CHF rates, but may be required elsewhere.
• There is little of note on the Asia-Pac docket in terms of tier 1 risk events.