Curve Twist Flattens, Off Early Lows That Were Inspired By Latest WSJ Fed Whisperer Piece

Early Asia-Pac trade saw participants digest the latest article from WSJ Fed whisperer Timiraos which pointed to some support for the Fe’s higher for longer interest rate mantra.

• Inflation worries surrounding Russia indefinitely suspending the Ukrainian grain export deal also factored into early price action.
• Block sales in TY (-3K, -2.5K & -2.5K) as well as screen-based flow drove the contract through Friday’s base, although the 26 Oct low (110-16) was not tested on the move.
• The space then regained some poise before turning bid on the back of the latest round of soft official PMI data out of China.
• There has been a fresh, albeit modest round of cheapening as we head into London hours, with TY getting nowhere near closing the opening gap lower.
• The contract trades -0-08 at 110-24 as a result, just below the middle of its 0-11 range, on solid volume of ~126K.
• Cash Tsys run 5bp cheaper to 1bp richer across the curve, twist flattening, with 3s providing the weakest point on the curve and a pivot observed around the 20-Year point.
• MNI Chicago PMI data and the latest Dallas Fed m’fing activity survey headline Monday’s local docket. Eurozone CPI data set to provide some interest in pre-NY trade, although most of the focus is already on Wednesday’s FOMC decision.