Cheaper As Cash Trade Gets Underway For The Week

Asia-Pac hours saw the open of cash Tsy trade for the week, with cash Tsys cheapening on follow through from hawkish Fedspeak observed since Friday’s close (courtesy of Waller & Bullard), Tsy Secretary Yellen’s weekend inflation warning and general weakness in EGBs and Gilts on Monday. That leaves cash Tsys 5-7bp cheaper across the curve, with the long end leading the way lower, resulting in some bear steepening.

• Tsys head into European hours a little off cheapest levels of the session, with TYU2 last dealing 0-05+ off its session base, -0-10 at 115-28.
• Some ACGB-linked moves were witnessed during Asia-Pac dealing on the back of the latest rounds of RBA rhetoric, although the cheapening bias remained intact, aided further by an uptick in e-mini futures and crude oil.
• 3x block buys of TYQ2 115.00 puts (2.5K lots apiece) headlined on the flow side during the overnight session.
• Looking ahead, Tuesday will see the release of existing home sales data and the latest Chicago Fed National Activity Index print. Elsewhere, we will get Fedspeak from Mester & Barkin.