Chinese COVID Worry & Fedspeak From Bostic Provide Support In Asia

Tsys firmed in Asia, with COVID worry out of China (localised restrictions in some of the big cities, in addition to the deaths of 3 elderly Beijing citizens, although some of those individuals had complex health issues) garnering most of the attention. This weighed on equities and crude, providing a bid for the USD & Tsys in the process.

• Cash Tsys sit 3-4bp richer across the curve, with the 2-/10-Year yield spread registering the deepest level of inversion witnessed during the current cycle in Asia-Pac hours.
• Elsewhere, the weekend saw Atlanta Fed President Bostic (’24 voter) support the idea of a stepdown in the pace of hikes in December, while he conceded that the terminal rate may be a little higher than previously envisaged he pointed to a desire to deliver a cumulative 75-100bp of tightening during the remainder of the current cycle (which would leave the Fed Funds target at 4.75-5.00%).
• This came after Friday saw Boston Fed President Collins (’22 voter) suggest that a 75bp hike would be on the table at the December FOMC.
• Overnight flow was headlined by a block buyer of FV futures (+1,720).
• Looking ahead, NY hours will see the release of the Chicago Fed national activity index, 5-Year Tsy supply and Fedspeak from Daly (’24 voter).