Block Sales Cap Early Overnight Uptick

An early downtick in e-minis and weakness in crude futures provided support for the Tsy space in early Asia-Pac dealing, although notable block sales in the futures space knocked the space away from best levels. Note that e-minis hover around neutral levels into London hours, while WTI & Brent crude futures sit ~$2 below settlement levels, nearly $2 off their respective session lows. This leaves TYU2 operating a touch below the middle of its 0-12 overnight range, last +0-01 at 116-31+, on volume of ~120K. Cash Tsys run 0.5bp cheaper to 1.5bp richer across the curve, pivoting around 3s.

• In terms of flow specifics, block sales in TU (2x -2.4K) & TY (-9.0K) futures provided the highlights, with a block buyer of FV futures (+3.0k) and block seller of FVQ2 110.00 puts (-2.5K) also observed.
• The Eurodollar dollar strip has seen some light twist flattening overnight. A quick reminder that yesterday saw recession worries at the fore, which pulled some rate hike premium out of the STIR space. This meant that the EDZ2/H3 spread moved into inverted territory for the first time in this cycle, while the EDZ2/Z3 spread registered fresh cycle lows.
• Looking ahead, European flash PMI data will be observed ahead of NY dealing. Thursday’s NY session will bring the release of weekly jobless claims data, flash U.S. PMI readings and the Kansas City Fed manufacturing print. We will also get day 2 of Fed Chair Powell’s testimony on the Hill and 5-Year TIPS supply.