Free Trial
STIR

RBC Looking To Enter IRZ2/Z3 Flattener

KRW

1 month USD/KRW Back Sub 1290 ​​

JGB TECHS

(U2) Off Lows, But Still Fragile

AUSSIE BONDS

Late Overnight Levels Prevail

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

Back The Other Way

US TSYS

A flat re-open for TYM2, last dealing +0-06 at 118-08.

  • To recap, the Tsy curve ran cheaper on Thursday, with the major benchmark Tsys finishing 6-11 bp cheaper as bears chipped away at the initial FOMC-inspired rally.
  • Growth and inflation worry was back at the fore on Thursday (from a headline perspective), after Powell’s pushback against the idea of 75bp rate hikes facilitated an unwind of some of the tightening embedded into the short end post-FOMC. Soft Chinese Caixin services PMI data and the BoE’s rhetoric surrounding its latest 25bp rate hike fed growth/inflation worries, before cheapening took hold in early NY hours. Still, the space managed to finish a little above worst levels of the day.
  • Note that the cheapening and steepening was a little at odds with the wider headline flow, with real yields moving higher and the longer end leading the move. U.S. 10s managed to extend on their recent foray above 3.00%, tagging a fresh cycle high in the process, with the move in the Tsy space being real yield driven. 30s also managed to tag fresh cycle highs in yield terms.
  • So what else could have driven the move?
  • Some flagged IG issuance hedging and Tsy auction setup as potential bearish factors. A tightening of longer dated invoice spreads indicated that futures were driving the cheapening, with longer dated swap spreads also narrowing, suggesting that swap flows were the laggard not the driver.
  • Unit labour cost data was firmer than expected, which provided another source of pressure.
  • Stocks traded heavily on the day, with the 3 major indices losing 3-5%, although this provided little meaningful cushion for Tsy bulls.
  • There isn’t much in the way of tier 1 risk events to flag during Asia-Pac hours, but the return of Japanese markets will give us cash Tsy trade during the Asia-Pac session for the first time since Monday. Looking ahead, Friday’s NFP print headlines the domestic data calendar, while a deluge of Fedspeak is due from Williams, Waller, Bullard, Kashkari, Daly & Bostic (Bullard & Daly will speak after market).
344 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

A flat re-open for TYM2, last dealing +0-06 at 118-08.

  • To recap, the Tsy curve ran cheaper on Thursday, with the major benchmark Tsys finishing 6-11 bp cheaper as bears chipped away at the initial FOMC-inspired rally.
  • Growth and inflation worry was back at the fore on Thursday (from a headline perspective), after Powell’s pushback against the idea of 75bp rate hikes facilitated an unwind of some of the tightening embedded into the short end post-FOMC. Soft Chinese Caixin services PMI data and the BoE’s rhetoric surrounding its latest 25bp rate hike fed growth/inflation worries, before cheapening took hold in early NY hours. Still, the space managed to finish a little above worst levels of the day.
  • Note that the cheapening and steepening was a little at odds with the wider headline flow, with real yields moving higher and the longer end leading the move. U.S. 10s managed to extend on their recent foray above 3.00%, tagging a fresh cycle high in the process, with the move in the Tsy space being real yield driven. 30s also managed to tag fresh cycle highs in yield terms.
  • So what else could have driven the move?
  • Some flagged IG issuance hedging and Tsy auction setup as potential bearish factors. A tightening of longer dated invoice spreads indicated that futures were driving the cheapening, with longer dated swap spreads also narrowing, suggesting that swap flows were the laggard not the driver.
  • Unit labour cost data was firmer than expected, which provided another source of pressure.
  • Stocks traded heavily on the day, with the 3 major indices losing 3-5%, although this provided little meaningful cushion for Tsy bulls.
  • There isn’t much in the way of tier 1 risk events to flag during Asia-Pac hours, but the return of Japanese markets will give us cash Tsy trade during the Asia-Pac session for the first time since Monday. Looking ahead, Friday’s NFP print headlines the domestic data calendar, while a deluge of Fedspeak is due from Williams, Waller, Bullard, Kashkari, Daly & Bostic (Bullard & Daly will speak after market).