Early Cheapening Holds In Asia

TYH3 deals at 114-08, -0-05+, in the middle of its 0-08+ range on heavy volume of ~162K

• Cash Tsys sit 1-5bps cheaper across the major benchmarks with the curve bear flattening.
• Tsys opened cheaper as Asia-Pac participants digested Friday's stronger-than-expected NFP print, as well as a piece from WSJ's Timiraos which noted "fresh signs of a hot U.S. labor market leave the Federal Reserve on course to raise interest rates by a quarter percentage point at its meeting next month and to signal another increase is likely after that."
• BoJ matters were also in focus. Japan's Deputy Chief Cabinet Secretary Isozaki noted there was no truth to a Nikkei report re: BoJ Deputy Gov Amamiya being approached to head up the central bank. Finance Minister Suzuki earlier said he hasn’t heard such discussions, although he conceded that he is “out of the loop” on the matter. Isozaki's comments resulted in some light screen selling of TY, however the momentum quickly faded.
• The early cheapening has held through the session, although Tsys have ticked away from session lows.
• It has been a particularly heavy volume session for both Tsys and STIR futures. Early flow was dominated by sellers and exposure to downside, although flows have been more mixed since then. TU blocks headlined on the Tsy side (-3,393 & +3.5K), while a block buy of SFRU3 (+5.3K) and some chunky screen flow in SFRH3 headlined in the shorter end.
• European focus will fall on Eurozone retail sales and BoE speak from Pill & Mann. Further out, lower tier data is all that we get on the NY docket. Fed Chair Powell's first remarks since the Fed meeting (Tuesday) provide the highlight this week.