Cheaper Into NFPs As Asia Fades The Rally & JGBs Soften

Tsys cheapened in Asia-Pac dealing, with the aforementioned move lower in JGB futures, on the back of speculation surrounding a BoJ policy review, building on an early regional willingness to fade Thursday’s rally.

• Cash Tsys sit ~4bp cheaper across the curve as a result, with TYH2 dealing just off the base of its 0-09+ overnight range, last -0-05+ at 114-14.
• Flow of note included a block seller of TY futures (-1,250) & a block buyer of FV futures (+1.6K).
• Focus continues to fall on the well-documented growth headwinds for the Chinese economy, although the daily new COVID case count in the country extended the moderation from the record highs seen earlier this week, albeit at a slow pace.
• A reminder that Thursday saw a further reduction in rate hike premium embedded into Fed dated OIS, with ~51bp of tightening now priced for this month’s meeting & a terminal rate of ~4.85% now eyed.
• NY hours will be headlined by the latest NFP print (see our full preview of that event here). Fedspeak from Barkin & Evans (with the latter soon to depart his post) will supplement that data release.