A Touch Cheaper In Asia

U.S. Tsys edged lower in Asia, with regional reaction to Thursday’s price action & related-JGB weakness applying pressure, keeping a lid on any buying interest at the same time. An earnings-related uptick in the NASDAQ also helped the space to cheapen (although NASDAQ e-minis have only pared a portion of Thursday’s losses) TYH2 last -0-04 at 127-15+, 0-02 off the base of a 0-06 range, while cash Tsys run ~1.0-2.5bp cheaper across the curve, bear flattening.

• To recap, hawkish BoE & ECB post-decision takeaways weighed on the U.S. Tsy space on Thursday, leaving cash Tsys ~4.0-6.5bp cheaper across the curve come the bell, with the 5- to 7-Year zone leading the way lower. The space outperformed vs. UK & German counterparts, given the domestic influence of the aforementioned central banks in those markets. A block flattener in TY/WN futures (-8,764/+2,000) headlined on the flow side, crossing during the NY morning. We also saw what seemed to be profit taking across several existing bearish TY options positions as Tsys sold off (covering 1 week, H2 & J2 TY puts).
• The latest labour market report headlines the U.S. docket on Friday (BBG median looks for +125K in headline NFPs, current BBG whisper number is +22K, although there is plenty of speculation re: the potential for a negative print).