A Touch Cheaper, Contained In Early Pre-NFP Trade

Weakness in long end JGBs helped limit any rallies in Tsys during Asia-Pac trade, applying a modest cheapening bias that leaves benchmark U.S. cash yields running 1-2bp firmer on the day, bear flattening.

• TYH4 prints -0-10 at 110-27, 0-00+ off the base of its 0-06+ session range.
• Some light pressure has been seen in recent trade as European bonds tick lower.
• Recent headline flow has centred on some tweaks to the wording re: Chinese monetary policy, flagged elsewhere.
• The latest monthly labour market survey dominates the macro docket today and may keep some sidelined pre-release.
• Our full preview of the event can be found here.
• We expect large sensitivity to surprises in either direction but perhaps asymmetrical risk re: a stronger report which sees markets question whether the circa five cuts priced for 2024 is excessive, at least for now.
• The first 25bp rate cut is more than fully priced come the end of the May ’24 FOMC, with ~16.5bp of cuts priced through the March ’24 FOMC.
• Ahead of the release Fed Funds futures are pricing ~123bp of cuts through ’23 on the whole,
• The preliminary UoM survey for December will also cross in NY hours, with particular focus on the inflation expectations components,