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Curve Bear Flattens On Monday, Cash Tsys Closed Until London

US TSYS

TYM3 deals at 115-01, -0-02, in line with late NY levels.

  • Cash tsys finished 5-14bps cheaper on Monday, the curve bear flattened.
  • A reminder that cash tsys are closed today until the London session due to the observance of a national holiday in Japan.
  • Tsys retreated from session highs as risk sentiment improved. US Regional Bank stocks firmed, with the exception of First Republic which was downgraded, KRW Bank Index finished higher on Monday. UBS also rose as investors focused on the upside of its Credit Suisse takeover.
  • Global central banks witnessed little demand for USD after combining with the Fed to enhance liquidity. The SNB awarded $101mn the most since Oct 2022 but well below historical averages in times of funding stress. BOE and BOJ received zero bids whilst the ECB alloted just $5mn.
  • FOMC dated OIS price ~30bps of hikes in March and May. The terminal rate is now seen at ~4.9%, with ~85bps of cuts seen in 2023.
  • There is a thin data calendar in Asia-Pac today. Further out we have the Philadelphia Fed Non-Manufacturing Index and Existing Home Sales. We also have the latest 20-Year Supply.

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