A Touch Cheaper To Start The Week

TYU2 is -0-03 at 121-01+ ahead of European hours, dealing within the confines of a narrow 0-06 range overnight, on subdued volume of ~58K. Cash Tsys run 1.5-2.5bp cheaper across the curve, with some modest bear steepening in play.

• To summarise, U.S. Tsys cheapened a touch through Asia, looking through the softer than expected manufacturing PMI released out of China since Friday’s close and continued bubbling Sino-U.S. tensions re: Taiwan (no official word from U.S. House Speaker Pelosi’s camp re: visiting Taiwan, with her Asia tour getting underway in Singapore after fresh warnings from the Chinese press and Chinese military drills in the Taiwan Strait).
• It would seem that comments from Minneapolis Fed President Kashkari (’23 voter) explained the modest cheapening, although the previously identified risk-negatives tempered the pressure. Kashkari stressed that the Fed is a long way from where it needs to be in its fight against inflation, flagging his surprise re: the market’s interpretation of the central bank’s language. A reminder that Kashkari has historically been one of the more dovish Fed voices, which probably gives extra weight to such comments.
• Looking ahead, final m’fing PMIs from across Europe are due ahead of U.S. hours, while the ISM m’fing survey and final S&P m’fing PMI headline the domestic docket on Monday.