Back From Early Cheaps, NFPs Eyed

TYM2 is +0-02+ at 118-04+ ahead of London hours, trading closer to the top than the base of its 0-15 overnight range, on volume of ~150K. Cash Tsys sit 0.5-1.5bp cheaper on the day.

• Asia-Pac participants were happy to sell Tsys in early dealing, although there was a lack of overt headline catalysts apparent. This meant that most pointed to Japanese reaction after the three-day Tokyo holiday, while a fresh leg higher in USD/CNH wouldn’t have harmed the early Tsy dynamic.
• Still, a bid has come back into the space, with the failure of 10-Year yields and TY futures when it came to cracking below their respective cycle cheaps allowing the space to correct from worst levels.
• Swap and invoice spreads are back from their Thursday tights, which suggests that cash Tsys at least when compared to futures, and payside swap flow helped the early cheapening move, at least incrementally (a reversal of what was observed during Thursday’s NY session, when the cheapening seemed to be futures driven).
• All in, it was quiet when it came to macro headline flow during Asia-Pacific hours, with participants awaiting the monthly NFP print (see our full preview of that release here).
• Elsewhere, there will be a deluge of Fedspeak on Friday, with Williams, Waller, Bullard, Kashkari, Daly & Bostic (Bullard & Daly will speak after market) all due up.