Early Cheapening Extends

Asia-Pac participants have continued to fade Thursday’s richening. The early weakness has extended as the major cash Tsy benchmarks run 2.5-5.0bp cheaper, with the front end leading the weakness and the early bear flattening of the curve holding. TYU2 last +0-02+ at 118-31+, 0-01+ off the base of its 0-08 range. As we noted earlier, the front-end led nature of the move would suggest to us that regional participants are happy to express faith in the continuation of the expeditious Fed tightening cycle at the levels that prevailed at the NY close, given the lack of meaningful macro headline flow observed thus far. The previously flagged block sale of TY futures (-4K) headlines on the flow front. Eurodollar futures run 2.5-5.5 lower through the reds.