A Little Cheaper Overnight, Asia Not Willing To Extend The Bid

The major cash Tsy benchmarks run 1-2bp cheaper across the curve, with intermediates leading the weakness. TYZ2 sits -0-05 at 113-01+ into London hours, around the middle of its 0-10 Asia-Pac range, on volume of ~99K

• Tsys have pulled away from session lows, which were facilitated by a combination of a block sale in FV futures (-3K), spill over from a bid in the broader USD, as well as pockets of screen selling in TY futures.
• A bid in the super long end of the JGB curve and some weakness in Chinese & HK equities may have resulted in some spill over demand for U.S. Tsys, allowing the space to stabilise.
• There was little in the way of Asia-Pac enthusiasm to extend on Wednesday’s bull flattening dynamic, with yesterday’s price action seeing the 2-/10-Year yield spread register the deepest levels of inversion witnessed during the current cycle, while 10-Year Tsy yields moved below the lower boundary of the Fed Funds target range.
• On top of the previously covered flow we also saw some screen sales of the FVH3 107.75/108.50 call spread and a seller of FFF3 futures in the short-end.
• A deluge of Fedspeak headlines the NY docket on Thursday, with weekly jobless claims data, housing starts, building permits and regional Fed economic activity indicators also slated for release. Further afield, there will be plenty of interest in UK’s Autumn Fiscal Statement after the challenges surrounding that matter witnessed in recent weeks/months.