Firmer As Asia Fades NY Weakness & Reacts To BoE QT Delay Reports

Tsys firmed into London hours on the back of an FT source report which suggested that “the Bank of England is likely to delay the sale of billions of pounds of government bonds in a bid to foster greater stability in gilt markets following the UK’s failed “mini” Budget.”

• The space was already trading on the front foot as Asia faded the cheapening observed in Monday’s NY session, after the NY move lacked a clear headline driver.
• That leaves TYZ2 +0-11+ at 111-02, 0-02 off the top of its 0-14 overnight range, operating on decent volume of ~115K (~38K of which has crossed since the BoE story from the FT hit an hour ago). Cash Tsy trade sees 3.0-5.5bp of richening across the curve, with the 5- to 7-Year zone leading and the long end lagging.
• On the flow side, we have seen block sellers of TY futures (-1.8K & -1.9K), pre-BoE headlines, a block sale of TYX2 109.50 puts (-5K) which triggered screen-based flows and screen buying of FVZ2 107.50 calls.
• Gilt markets will be eyed once again, especially given the broader market reaction surrounding the FT story.
• Tuesday’s NY docket will see the release of industrial production data, as well as TIC flows and the NAHB housing market index. We will also get Fedspeak from Bostic & Kashkari.