Coiling In Asia

Tsys never strayed too far from neutral during Asia-Pac dealing, even with e-minis gradually moving higher as we worked through overnight trade.

• The latest round of missile launches from North Korea failed to impact wider macro sentiment, with a subsequent show of joint military force on the part of the U.S. & South Korea having equally limited impact. A hawkish RBNZ monetary policy decision also failed to feed into Tsy price action. Recent headline flow has revealed that China has conducted military drills near Taiwan to “warn the U.S.” Once again, this has failed to impact wider risk sentiment.
• TYM2 trades -0-01 at 120-11 as a result, sticking to a narrow 0-05+ range on volume of ~170K. Note that futures roll activity supported volume. Cash Tsys run 0.5-2.0bp cheaper across the curve, with 5s leading the sell off.
• Block lifts in TYM2 (+5.0K & +2.0K) provided the highlights on the flow side.
• Wednesday’s NY session will see the release of the minutes from the most recent FOMC decision, durable goods and MBA mortgage apps data, 5-Year Tsy & 2-Year FRN supply and Fedspeak from Vice Chair Brainard.