Bear Flattening In Holiday-Thinned Monday Trade, Busy Central Bank Week Eyed

TYZ2 deals around late NY levels, +0-01 at 114-12+.

• Cash Tsys were flat to 7bp cheaper come the bell on Monday, in a bear flattening environment.
• While there was little in the way of overt catalysts noted for the bounce from session cheaps, some pointed to an absence of any clear signal re: a 100bp Fed hike later this week in WSJ Fed whisperer Timiraos’ latest article as a potential trigger point for the bounce.
• Flows supported this idea, with block and screen buying in SFRU2 noted (in addition to a TU block buy). OIS priced in ~79bp of tightening for this week’s FOMC come the close, virtually unchanged from Friday’s closing levels.
• Futures has drifted lower in limited liquidity, pre-NY dealing (Tokyo & London were closed for holidays).
• There isn’t much in the way of tier one risk events slated for Asia-Pac hours, with no change expected in the latest round of monthly LPR fixings out of China. Note that 13 of the central banks under our coverage will issue interest rate decisions in the coming 3 days (headlined by the Fed), with a cumulative 487.5bp of tightening expected to be provided by 9 of them, while the remaining 4 are expected to leave interest rates unchanged (based on BBG medians).