Back From Early Lows, Risk-Off Headlines Fight With Friday Spill Over

Early Asia trade saw the major Tsy futures contracts provide fresh cycle lows as participants reacted to Friday’s NY bear steepening.

• Still, it wasn’t all one-way trade, with risk-off weekend headline flow, including focus on fresh western sanctions on Russia, another North Korean missile launch, a warning re: the “complicated and grave” situation that the Chinese labour market is facing via the country’s Premier and deeper mobility restrictions in areas of Beijing (confirmed) & Shanghai (rumoured, per RTRS sources), allowing the space to recover from worst levels. Note that the aforementioned cocktail of risk-negative headline flow, coupled with participants’ being cognisant of headline risks surrounding the Russia-Ukraine conflict (ahead of President Putin’s annual Victory Day parade address, scheduled for later today), leaves e-minis ~1.0% lower on the day at typing. Still e-minis are off of worst levels of the session, allowing Tsys to move away from richest levels.
• The latest round of monthly Chinese trade data did little for the space (exports and imports both beat exp., providing a slightly narrower than expected Chinese trade surplus for the month of April).
• TYM2 hovers just below the middle of its 0-12+ Asia-Pac range as a result, last dealing -0-06 at 117-19+. Note that technical support isn’t really seen until the 0.764 projection of the Mar 7-28-31 price swing (116-28), with the contract’s primary downtrend extending and moving average studies in bear mode. Cash Tsys have twist steepened around 5s, running 0.5bp richer to ~2bp cheaper across the curve.
• Looking ahead, Monday’s NY docket is slim, with wholesale data due.