A Little Steeper Now, Asia Bid Gives Way

Tsys drift away from Asia-Pac bests. This comes after yesterday’s mix of round number focus in 30-Year yields, a soft ADP employment print and aggressive pull lower in oil prices ultimately provided a bid that more than reversed Asia- early London weakness.

• TYZ3 last -0-02+ at 107-01, just off the base of a 0-09 session range (initial technical parameters seen at 106-00/107-14).
• Cash Tsys are flat to 2.5bp cheaper, bear steepening.
• 2s10s trades close to YtD highs, while 5s30s is just shy of the multi-month steeps seen in recent sessions.
• FOMC-dated OIS shows ~10.5bp of further tightening for the current cycle (come the end of the December meeting), before ~57bp of easing is priced through Sep ’24 (vs. current terminal rate pricing levels).
• A reminder that yesterday’s price action saw a dovish adjustment in FOMC pricing, with the aforementioned market drivers playing a part there as well.