Asia To Assess Steeper Curve

TYZ2 edges away from cycle lows registered late in NY hours on the back of BBG source report which noted that “the Biden administration is exploring the possibility of new export controls that would limit China’s access to some of the most powerful emerging computing technologies, according to people familiar with the situation.” The contract last prints +0-01 at 109-12+.

• Cash Tsys finished Thursday’s session 5.5-9.5bp cheaper across the curve, with bear steepening observed.
• A surprise fall in weekly initial jobless claims data helped apply some pressure to the space in NY hours, while longer dated payside swap flows late in the NY session were cited as a reason for continued weakness into the bell.
• This came after Gilt swings & UK political matters set the tone early on Thursday, as UK PM Truss resigned.
• Hawkish Fed utterances continued, with terminal rate pricing now above 5.00% in FOMC dated OIS.
• Japanese CPI data and JGB yield dynamics will be eyed during Asia-Pac hours, while there will be interest in the latest evolution of the UK political saga over the next 72 or so hours (the identity of the new PM could be known as soon as Monday).
• Friday’s NY docket is thin, headlined by Fedspeak from Williams & Evans, ahead of the pre-FOMC blackout which goes into play this weekend.