Bear Flattening Ahead Of Packed Risk Calendar

Cash Tsys came under some light bear flattening pressure in Asia-Pac hours, presumably aided by the Asia-Pac reaction to Wednesday’s price action in the wider core global FI space.

• That allowed some of the 20-Year auction-related bid to unwind as Asia-Pac participants looked forward to a deluge of central bank decisions out of the UK and Europe, as well as day two of Fed Chair Powell’s latest appearance on the Hill, weekly jobless claims data, regional Fed activity indicators and existing home sales data. Fedspeak from Waller, Bowman, Mester & Barkin will also be eyed.
• A quick reminder that holidays in Hong Kong and China dented liquidity and curtailed activity during Asia-Pac dealing. The major cash benchmarks sit 0.5-2bp cheaper across the Tsy curve, while TYU3 is -0-04, operating in a narrow 0-05+ range.
• FOMC-dated OIS prices a cumulative ~25bp of tightening through November, with December meeting pricing sitting ~8bp below current terminal rate pricing.