A Touch Cheaper Early On

French President Macron’s lead in the first round of the Presidential elections is allowing markets to breathe a ‘sigh of relief’ in early Asia dealing (projections point to a Macron victory vs. far right candidate Le Pen after the second round of voting, which is due in a couple of weeks), with the EUR outperforming in G10 FX, U.S. e-minis a touch firmer and U.S. Tsy futures marginally lower. TYM2 last -0-06+ at 119-29+, 0-01 off worst levels of the day, after a brief and shallow look through Friday’s trough.

• Weekend Fedspeak from Cleveland Fed President Mester (’22 voter) pointed to elevated inflation through ’23, although she noted that Fed policy will allow the trajectory of inflation to shift lower, while expressing optimism re: the potential for continued economic expansion even as the central bank tightens policy.
• A reminder that the curve bear flattened on Friday, with little in the way of meaningful fresh headline drivers observed during NY hours. The major cash Tsy benchmarks were 4-6bp cheaper come the bell, with 3s leading the way lower. The cheapening move was seemingly aided by payside swap flow, with 5+-Year swap spreads 1.5-2.5bp wider come the bell.
• Chinese inflation data headlines Monday’s limited Asia-Pac docket, while Fedspeak from Governors Bowman & Waller, Atlanta Fed President Bostic (’24 voter) & Chicago Fed President Evens (’23 voter) headline during NY hours.