Weakness Extends In Asia

Tsys worked their way lower in Asia-Pac hours, with focus on the potential for an upsizing of U.S. fiscal & infrastructure support spilling over from the latter part of the NY session. This took 10-Year yields to within touching distance of the recent cycle highs, last printing at ~1.742%. The March 18 high resides at 1.7526%. A break would allow bond bears to switch focus to the nearby 50% retracement of the move from the '18 high to the '20 low, located at 1.7866%. On the flow side a 3.0K block seller FVM1 provided the highlight, as 5s printed above 0.900% in yield terms for the first time since Mar '20. T-Notes last -0-07 at 131-04+. 7+-Year Tsys sit ~3.5bp cheaper on the day.

• As a reminder, the space unwound its early bid on Monday, with the early defensive posturing linked to the well-documented hedge fund equity position liquidation on Friday (after more details became apparent over the weekend/during early Monday trade, with talk of ongoing residual position liquidation apparent through Monday). Crude oil's relatively sharp retracement from lows (oil volatility apparent after the ship blocking the Suez Canal was refloated) also added pressure to the space. 10s represented the weakest point on the cash curve on Monday, cheapening by a little over 3.0bp come the bell. Cautious rhetoric from the CDC and President Biden re: the continued risks surrounding COVID did little to hamper the broader direction of travel, with equities paring most of their losses as the fallout from the Archegos liquidation appeared to be relatively contained.
• Consumer confidence data and Fedspeak from Williams & Quarles headline locally on Tuesday.