Asia Fades Thursday’s Move

Asia-Pac participants were happy to fade Thursday’s richening. The early weakness extended as the major cash Tsy benchmarks run 2.5-5.0bp cheaper, with the front end leading the weakness and the early bear flattening of the curve holding. TYU2 last +0-02+ at 118-31+, 0-01+ off the base of its 0-08 range, operating on volume of ~90K (an uptick from what has been seen in recent sessions).

• As we noted earlier, the front-end led nature of the overnight move in Tsys would suggest to us that regional participants are happy to express faith in the continuation of the expeditious Fed tightening cycle at the levels that prevailed at the NY close, given the lack of meaningful macro headline flow observed thus far.
• A block sale of TY futures (-4K) headlined on the flow side during the overnight session..
• Weakness in in e-mini futures in lieu of a soft earnings print from Snapchat has been noted, with the NASDAQ 100 contract leading the way lower, last -0.7%, which may have provided some counter to the cheapening.
• Eurodollar futures run 2.0-4.5 lower through the reds.
• Flash PMIs from across Europe headline the broader docket ahead of Friday’s NY session, with the U.S. suite of flash Markit PMI prints set to headline the domestic docket.