Curve Steepens In Volatile Asian Session

TYM3 deals at 115-22, -0-04, marginally off the top of the observed 0-29+ range on elevated volume of ~273k.

• Cash tsys sit 2bps cheaper to 2bps richer across the major benchmarks, the curve has twist steepened pivoting on 5s.
• Tsys opened dealing cheaper as local participants digested news of the UBS takeover over of Credit Suisse as well as the coordinated Central Bank action to enhance the provision of US Dollar Liquidity. The 2-year Yield rose as much as 17bps.
• A fall in regional bank stocks saw tsys firm off session lows. The likely wipeout of holders of Credit Suisse’s AT1 debt rattled risk sentiment.
• Fed data OIS sit level changed from closing levels on Friday, there were 23bps of hikes seen in March and May with a terminal rate of ~4.8%. Through to December 2023 there are ~100bps of cuts priced in.
• The fallout from the UBS/Credit Suisse deal as well as the US focus on regional banks will dominate today. PPI data from Germany and Eurozone trade balance headline an otherwise thin docket on Monday.