What Will Asia Make Of The Latest Cheapening

T-Notes -0-02 at 136-11+, hovering just above their Monday low as Asia-Pac dealing gets underway.

• As a reminder, the U.S. Tsy space cheapened on Monday, with the 7-10 Year zone representing the weak point on the cash curve (cheapening by ~3.0bp come the bell), while T-Notes finished the session at worst levels of the day. The start of mid-month Tsy supply added some further impetus to the recent move higher in yields, with the fiscal dynamic in the U.S. still front and centre. The latest 3-Year note auction saw a 0.3bp tail, although the takedown metrics firmed, as indirect takedown nudged higher and dealer takedown moderated at the margins vs. prev. 3-Year supply. Still, the major takedown metrics showed little deviation from the recent averages, even with dealer takedown ever so slightly below the recent norm.
• U.S. political matters also remained at the fore, with the House movements re: Trump impeachment developing in line with weekend guidance, while the FBI issued warnings re: unrest across the U.S. as we head towards Biden's Presidential inauguration.
• Fed's Kaplan is currently speaking at a town hall event, although we have yet to see any notable headline flow on that front. Elsewhere, there is little of note on the Asia-Pac docket, but Tuesday will see the return of Japanese market participants after their elongated weekend.