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Asia-Pac Liquidity Returns

US TSYS

T-Notes a touch lower vs. late NY levels in early Asia-Pac trade, last +0-01+ at 132-19.

  • The space rallied during NY hours, outside of a leg lower around the release of the quarterly refunding announcement, although there was no movement in coupon supply outlined by the Tsy (the TBAC "anticipates that Treasury may want to reduce nominal coupon sizes beginning late this year or early next year"). A raft of Fedspeak hit, headlined by Vice Chair Clarida, who reiterated the notion that the Fed is "a long way from our goals, and in our new framework, we want to see actual progress and not just forecast progress."
  • T-Notes finished just shy of best levels, with that contract sticking within the range witnessed on Tuesday. 7s outperformed on the curve, richening by 3.0bp on the day, while 5-Year breakevens printed another fresh multi-year high. On the flow side, the cheapening surrounding the quarterly refunding announcement saw real-money a/c's buying the belly, while fast money looked to fade the cheapening of 20s on the 10-/20-/30-Year fly, per several desks. STIR flow was dominated by the 3EU1 98.00 puts, which saw ~100K lots lifted throughout the day, adding to the recent round of downside bets, maybe surrounding the potential for taper talk at the Fed's annual Jackson Hole symposium (~200K of the 3EU1 98.00/99.00 risk reversals, buying the puts and selling the calls, have traded in recent weeks).
  • There is little in the way of tier 1 headline risk slated for Asia-Pac hours, although Japanese & Chinese participants return from their respective holidays, which will boost regional liquidity.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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