A Touch Firmer On UK Fiscal Hopes

Tsys are a touch richer on the back of the weekend rhetoric from the new UK C’llr & UK press reports pointing to a more viable/responsible fiscal approach after the “mini” Budget disaster, with the major cash benchmarks printing 2.0-3.5bp firmer, as 5s lead the bid.

• Still, a block sale in TY futures has helped cap the space, while a lack of meaningful headline flow since the re-open has limited wider activity after the initial richening impulse.
• TYZ2 last prints +0-05 at 110-24, 0-01+ off the peak of its 0-07+ Asia range, with volume limited to ~57K lots.
• Outside of the UK news, the weekend saw St. Louis Fed President Bullard fail to rule out the idea of back-to-back 75bp hikes across the two remaining Fed meetings of ’22, although he flagged that ’23 could be a more data-dependent year for the central bank, maybe entailing more two-way risk to rates vs. what we have seen in ’22.
• Chinese President Xi’s opening round of remarks at the CPC congress provided nothing in the way of curveballs re: the major policy areas.
• A thin NY docket, with the Empire m’fing survey headlining, will leave headline flow front and centre as we move through the day, with UK Gilt market gyrations likely to set the tone in European hours (once again).