Asia Sees Tsys Coil Ahead Of NFPs

T-Notes stuck to a 0-02+ range in Asia, last +0-02 at 132-10+, while the major cash Tsy benchmarks print little changed to 1.0bp cheaper, with the curve seeing some light bear flattening after Thursday's late twist flattening. Headline and market flow was light overnight, in what was a typical pre-NFP, pre-Independence Day weekend Asia-Pac session (note that SIFMA has recommended a 14:00 Eastern close for cash Tsys on Friday).

• To recap, cash Tsys twist flattened on Thursday, with very modest cheapening evident through 5s, while 30s richened by ~2.5bp come the close. A TU/WN flattener block (-22,000/+2,257) was seen late in NY trade, aiding the broader theme ahead of the close, which allowed 20s and 30s to tag richest levels of the session late on. The space moved off early firms in NY dealing, in what was generally a lacklustre session. There was nothing in the way of a notable reaction to better than expected initial jobless claims data, while the ISM m'fing survey resulted in some modest cheapening. T-Notes registered worst levels of the session as the details of the survey revealed another surge in the prices paid sub-index, which hit 92.1, the highest rate of expansion witnessed since 1979, before recovering as the late flattening dynamic set in. Participants were clearly cognisant of the proximity to Friday's NFP print and holiday-shortened session (for cash Tsys)/the elongated weekend.
• Ahead of NFPs J.P.Morgan note that "overall, valuations remain rich but we do not think all bearish curve positions have been unwound; thus, we think there risks are skewed to a larger decline in yields should this number disappoint to the downside."