A Touch Richer As USD Softens

Cash Tsys have reversed their early downtick to last print 1.5-2.5bp richer across the curve, with bull steepening in play as the front end outperforms. TYZ2 runs +0-08 at 110-27, building on the late NY recovery from Monday’s lows, dealing just off the peak of its 0-07+ range.

• The move comes even with a block sale seen in TY futures.
• Note that some upside interest in the space has been observed, via the previously outlined lift of TYZ2 112.75 calls.
• The latest Chinese Caixin manufacturing PMI print resided in contractionary territory for a third straight month (albeit registering a slower pace of contraction vs. what was seen in Sep, as the headline reading provided a modest beat vs. exp.).
• We haven’t seen much in the way of meaningful macro headline flow, so would point to the downtick in the broader USD as a supportive factor for the space when it comes to early Asia-Pac dealing.