Asia Digests Weekend Headline Flow

TYU2 deals marginally below late NY levels early this week, still 0-05 or so above Friday’s session base, last +0-03 at 118-06+. E-minis are through their respective Friday troughs, 0.3-0.5% lower, as Asia reacts to Friday’s weakness.

• Weekend headline flow was dominated by familiar topics, with UK political matters, German economic headwinds, energy worries across Europe and short-term headwinds surrounding the Chinese economy eyed. Elsewhere, there remains plenty of noise re: the Iran situation, with little overt, concrete progress made.
• To recap, cash Tsys were 3.5-9.0bp cheaper on Friday, with the 10- to 20-Year zone leading the weakness.
• The move started in Asia, with further weakness observed in early London dealing in lieu of higher than expected German PPI readings. Hawkish Fedspeak from Richmond Fed President Barkin (’24 voter) provided no impediments to the cheapening but didn’t elicit any direct market reaction.
• The monthly Chinese LPR fixings headline the Asia-Pac docket on Monday (10bp cuts to both the 1- & 5-Year fixings are the consensus view after last week’s surprise 10bp cuts in the interest rates applied to the 1-Year MLF & 7-day reverse repo operations)
• Monday’s NY docket is headlined by the latest national activity index reading from the Chicago Fed, although that lower tier data release is unlikely to impact the market.
• Participants are already zeroed in on this year’s Jackson Hole Symposium (which will be held Thursday-Saturday of this week), with the focus of the annual central bank gathering being “Reassessing Constraints on the Economy and Policy.”