A Little Richer In Asia

Tsys richened overnight, with desks flagging an apparent regional interest in fading Thursday’s cheapening & steepening given the lack of overt game changing drivers evident yesterday (with position squaring and block flow-driven moves evident in NY hours, as well 30-Year auction concession/reaction).

• Upside options expressions in the form of FVU2 113.00 & TYU2 119.50 calls aided the direction of travel, as did a couple of rounds of screen lifts in TY futures.
• That leaves TYU2 printing +0-05 at 119-08 ahead of London hours, 0-03 off the peak of its 0-12 Asia-Pac range, although volume isn’t particularly firm, running at ~80K lots.
• Cash Tsys sit 1.5-3.5bp richer across the curve, with 20s leading the rally.
• San Francisco Fed President Daly (’24 voter) reiterated her baseline view of a 50bp hike at the September FOMC, although she once again failed to rule out the idea of a 75bp rate hike, stressing the data-dependent nature of monetary policy alongside a need to assess the inflation and labour market data that will cross between now and then.
• Looking ahead, NY hours will see the latest round of UoM sentiment data (with the inflation expectation components eyed) and Fedspeak from Richmond Fed President Barkin (’24 voter).