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TYH2 turns bid in early Asia-Pac dealing, with 5 cases of Omicron detected in NY state, resulting in NY mayor de Blasio pointing to assumptions re: community spread. The contract prints +0-06+ at 130-25+.

  • To recap, the curve bear flattened on Thursday, 3s provided the weak point, cheapening by 8.0bp, while 30s cheapened by ~2.5bp come the bell. Hawkish Fed rhetoric re: the tapering pace from Quarles (outgoing Governor), Barkin, Daly & Bostic provided the flattening impetus, while a reversal in crude oil futures, resulting in a higher oil prices on the day, also weighed into the bell. 8-part jumbo issuance from Daimler trucks also applied pressure.
  • When it comes to the Fed hiking cycle, the OIS strip prices the first 25bp hike at the end of the Fed’s Jun ’22 meeting, with another hike priced by the end of the Nov ’22 gathering (per BBG WIRP). Further out, the Eurodollar strip is starting to indicate the potential for a rate cut in ’25, with the EDZ4/Z5 spread moving into incremental negative territory.
  • Block flow of note included a TU/UXY steepener (+11,000/-3,500) during the latter part of the NY morning and an outright UXY block buyer (+5,182) in the early part of the NY afternoon.
  • Caixin services PMI data out of China headlines the Asia-Pacific docket on Friday, while NFPs and the latest ISM services survey print will headline during NY hours. We will also hear from St. Louis Fed President Bullard (’22 FOMC voter) ahead of the pre-FOMC blackout period.