Fading The Recent Cheapening

T-Notes operate a touch above late NY levels, but still shy of Wednesday's peak, last +0-06 at 131-21.

• To recap, Wednesday's Asia-Pac dip buying extended through European trade as participants looked to fade the recent aggressive cheapening in the space, with T-Notes topping out around the time NY participants started to file in. A 4,614 block seller of UXYZ1 futures helped the space off of richest levels early in the NY session. Tsys ultimately finishing the day richer across the curve, as yields fell by circa 1-3bp with 5s outperforming. Block flow in the futures space then helped to shape the second half of NY trade, with 4,519 USZ1 given around 13:00 NY, taking the contract to fresh NY session lows (although the early Asia-Pac lows were not challenged), before a late 7,843 block buy of TYZ1 helped the space to firm a little into the close.
• Fiscal issues continue to linger on the Hill, with the CBO pointing to the debt limit being exhausted in late October/early November, while there were no clear signs re: a break of the fiscal impasse evident across the aisle.
• Wednesday's Fedspeak didn't move the needle.
• Official Chinese PMI data headlines the docket during the Asia-Pac session, ahead of a weeklong holiday for mainland China, kicking off on Friday. Weekly jobless claims data and the latest MNI Chicago PMI print top the U.S. docket on Thursday, with another raft of Fedspeak due.