Chinese GDP Growth Target Lends Light Support In Asia

TYM3 +0-04+ at 111-07+, 0-02 off the peak of its 0-08 range on volume of ~86K. Cash Tsys are 0.5-2.0bp richer, bull steepening.

• Tsys managed to extend Friday’s richening during Asia-Pac trade, with the setting of China’s annual GDP growth (“around 5%”) at the less optimistic end of the spectrum of potential outcomes providing support.
• Desks also pointed to a more notable willingness amongst regional participants to undertake some short squaring activity given Friday’s stabilisation/rally, with eyes on this week’s tier one event risk (Powell’s two-day testimony to Congress and the monthly labour market report). Indeed, headline flow was very subdued in Asia hours, outside of some non-market moving rhetoric from China’s NPC.
• Early Asia-Pac trade saw a modest tick lower for Tsy futures, potentially aided by weekend comments from San Francisco Fed President Daly (non-voter), as she pointed to a willingness to do more re: rate hikes if it looks like inflation is accelerating (alongside an already apparent need to deploy further rate hikes and signalling re: higher for longer rates).
• The European docket is fairly limited on Monday, save a speech from ECB chief economist Lane. In the U.S., factory orders and final durable goods readings will cross in NY hours. The highlights of the week include Fed Chair Powell’s semi-annual testimony to Congress (Tuesday & Wednesday) and Friday’s NFP print. Ahead of these events, the OIS strip is pricing ~30bp of tightening for this month’s FOMC & a terminal rate of ~5.45%.