Away From Cheaps Into China PMIs

Tsys have recovered some poise ahead of the official Chinese PMI data that will cross at the bottom of the hour, with e-minis operating just off best levels (last +0.3%). While there wasn’t much in the way of overt headline drivers to put a bid into e-minis we would point to the slight reduction in the Fed’s balance sheet size (and feedthrough into less worry re: the banking sector) and month- & quarter-end rebalancing flows (touted flows out of bonds into stocks) as potential background drivers, as well as Asia-Pac reaction to Thursday’s wider market moves. Cash Tsys still twist steepen, last 2bp richer to 0.5bp cheaper, pivoting at 10s, while TYM3 is -0-02 at 114-16+, around the middle of its 0-04+ range.