Weaker But Off Worst Levels

Core FI markets were seemingly happy to operate against the tone set during the first half of Asia-Pac trade, with little in the way of tier 1 headline flow evident since the re-open, leaving the U.S. Senate's passage of an amended COVID relief Bill and oil market developments that became apparent over the weekend (a Yemeni Houthi missile attack on Saudi Aramco facilities, which didn't seem to harm output) in the driving seat.

• T-Notes -0-08 at 132-02 at typing, while the belly underperforms in cash trade, with 7s sitting ~2.0bp cheaper on the day, although the space is off intraday cheaps with e-minis now in negative territory, more than reversing their early gains (excl. DJIA futures).
• A reminder that Friday saw the belly of the cash curve cheapen marginally on the day, while the wings richened, with 30s outperforming, richening by ~2.5bp come the bell. A firmer than expected round of U.S. labour market data triggered broad based selling in the wake of the release, with 10s touching fresh cycle cheaps on the move, as yields topped 1.62%. The space then recovered from worst levels of the day as desks flagged foreign real money a/c's and central banks as key players in 5-10 Year space during the move away from cheaps. Swap spreads tightened on the day, with the move extending as FDIC Chair McWilliams noted that it doesn't seem that banking agencies will need to extend the SLR relief currently prescribed for U.S. Tsys.
• With the Fed blackout now underway and a continued lack of overt pushback re: the recent moves in Tsy yields evident participants await this week's 3-, 10- & 30-Year supply, with 3s kicking things off on Tuesday.