Asia To Assess Fresh Cycle Highs For Yields Across The Curve

TYZ2 deals just off its late NY low, last -0-00+ at 109-31+.

• The major cash benchmarks finished Wednesday dealing 9.5-14.0bp cheaper, with 7s leading the weakness and fresh cycle highs registered across the curve in yield terms.
• Firmer than expected UK data allowed the space to extend on the block flow-driven weakness witnessed during the Asia-Pac session, before corporate bond issuance and preparation for, and reaction to, what turned out to be a particularly weak 20-Year Tsy auction applied fresh downside impetus during the NY session.
• News that Germany will increase the amount of securities it can lend in the repo market (on the back of the well-documented collateral squeeze) also weighed during European hours, with Bunds under pressure on the news.
• Firmer than expected Canadian inflation data also applied pressure from north of the border, as BoC tightening expectations were readjusted.
• Hawkish Fedspeak was also noted.
• Fedspeak from Bullard & Evans is due shortly, while Australian labour market data and the latest monthly LPR fixings out of China (no changes expected) headline the regional docket during Asia-Pac hours.
• Further out, Thursday’s NY docket will see the release of the latest Philly Fed survey, weekly jobless claims and existing home sales data. We will also get 5-Year TIPS supply and Fedpseak from Bowman, Jefferson, Cook & Harker.