Asia To Assess Latest Notable Cheapening/Flattening Moves In Wake Of PCE

TYH3 deals at 110-29, -0-00+, in line with levels seen late in Friday's NY session.

• Cash Tsys finished 4-12bps cheaper on Friday across the major benchmarks, the curve bear flattened. 2-Year yields printed at the highest level since July 2007 before moderating a touch in late trade.
• Firmer than expected PCE readings unscored the risks of persistently high inflation, pressuring Tsys. Elsewhere, New home Sales rose and U.S. Consumer Sentiment firmed to its highest level in a year.
• Earlier in the day cross market flows weighed on Tsys, as weakness in Bunds and Gilts spilled over.
• There was a slew of Fedspeak on Friday. Cleveland Fed President Mester and Boston Fed President Collins reiterated themes seen in previous communique, that rates need to rise and be held at restrictive levels to ensure inflation softens. St. Louis Fed President Bullard noted that the Fed had to move quickly and reestablish its credibility now.
• In OIS markets terminal rate expectations rose ~6bps to close at ~5.40%.
• There is a thin slate in Asia-Pac hours today. Further out we will see Durable Goods Orders, Pending Home Sales and Dallas Fed Manf Activity. Fedspeak from Governor Jefferson will also cross.