Cheaper At The Margin In Asia

Fresh record highs for both the S&P 500 & NASDAQ 100 e-mini contracts applied some very modest pressure to the Tsy space in Asia, although tight ranges were in play in the space overnight. T-Notes last -0-01+ at 130-17, sticking to a narrow 0-04 range. Cash Tsys are ~1.0-1.5bp cheaper across the curve. Macro headline flow remains very light.

• To recap, Thursday saw the curve twist flatten with 2s and 3s incrementally cheaper on the day, while the remainder of the Tsy benchmarks richened by ~0.5-1.5bp, with 20s outperforming. Thursday provided a relatively limited session all told, with the latest Philly Fed survey seen to be mimicking the movements witnessed in the Empire m'fing survey which hit earlier this week (notable uptick in headline, with price pressures building), while initial weekly jobless claims saw a smaller than expected dip (it would have been a modest uptick without an upward revision to the prior week) and continuing jobless claims saw a larger than expected downtick. Early price action was shaped by a block sale of WN futures (-2,145), which was followed up by a block buy of TY futures (+8,650). 10-Year TIPS supply was well received, stopping through at a record low yield. Dealer participation moderated, although the degree of stop through and cover ratio were softer than the prior round of 10-Year TIPS supply. In the short-end, TD Securities were the latest sell-side name to recommend a Eurodollar steepener, flagging the EDU3/U4 spread as their preferred expression.
• NY hours will be headlined by Fedspeak from Vice Chair Clarida & Governor Waller. We will also see the House vote on President Biden's BBB Bill. A note that the CBO & the White House are at loggerheads re: the "paid for" status of the BBB scheme.