Choppy But Confined In Asia

T-Notes are trading a little off worst levels after a foray through their Thursday lows amid some post-Powell (confined) chop in Asia, with some certainty re: the direction of Chinese macro policy seemingly allowing equity markets to move off of their lows and the DXY to move away from highs. T-Notes last -0-03 at 132-09+, while cash Tsys are back to little changed on the day. 10s have failed to test 1.60% thus far, a level touted as a potential convexity hedging trigger by some. BBG flagged a 2.0K block seller of TYM1, but that isn't lodged on the CME website.

• As a reminder, Fed Chair Powell's lack of overt pushback against recent Tsy market moves, coupled with a lack of commentary on SLR matters, pushed Tsys lower in late NY trade on Thursday, with softness evident across the curve as 10s proved to be the weak point, cheapening by a little over 8.0bp come the bell. In summary Powell went over a number of well-trodden dovish themes, stressing that the Fed is a long way from achieving its goals and there was "a lot of ground to cover" before it would be appropriate to tighten policy. He also shadowed recent comments from Governor Brainard, flagging that the recent bond market volatility had caught his attention, while noting that the Fed would be concerned if financial conditions tightened or if disorderly market conditions became apparent. An interesting development that didn't get much attention (given his usual notoriety) saw Credit Suisse's Zoltan Pozsar express his regret re: his call on the need for the Fed to conduct a new operation twist, as he pointed to self-healing properties in the markets and the current attractiveness of U.S. Tsy FX-hedged yields to offshore investors as potential stabilisers. This came late Wednesday NY time via a BBG podcast. Heavy early NY selling was seen in the EDU2/Z2 spread on Thursday, while a 20K block seller showed up in EDZ5.
• The monthly NFP report and a pre-Fed blackout speech from 2021 Fed voter Bostic headline locally on Friday.