A Little Cheaper In Asia

TYU2 hovers around the middle of its 0-11 overnight range, last dealing -0-00+ at 119-28, on sub-par volume of ~75K, while cash Tsys run 2.0-3.5bp cheaper across the curve.

• Early Asia trade saw regional participants sell Tsys on the back of a rally in European/NY hours for a second consecutive session, which could suggest that the regional impulse has been dominated by profit taking on existing long positions over the past couple of sessions, as opposed to an attempt to fade the richening, given the degree of the pull lower in yields in pre-Asia trade.
• Modest losses for crude oil futures (which more than reversed the early uptick), coupled with a downtick for equities and continued focus on the recession-related risks (which drove Friday’s bid in core global FI markets, in lieu of soft European and U.S. PMI data) then took the edge off the initial cheapening, even with the White House continuing to play down any such fears. Meanwhile, subsequent talk of potential support for the Chinese property sector limited the downtick in wider equity indices.
• Elsewhere, weekend headline flow focused on simmering Sino-U.S. tensions surrounding Taiwan and a Russian missile attack on the port of Odesa, which came hours after the two countries agreed a pact to allow Ukraine to export grain (note that this particular attack wouldn’t breach that pact, if Russia’s suggestion that it was targeting naval hardware prove to be true).
• Overnight flow was dominated by a block buyer of TY futures (+3.3K).
• Looking ahead, the NY calendar is headlined by regional Fed activity indices from Chicago & Dallas, along with 2-Year Tsy supply.