Firmer As Geopolitical Risk, China CPI & Weakness In Asia Stocks Helps Stabilisation

Cash Tsys sit ~3-4bp richer across the curve, while TYZ3 shows +0-10+ a 107-18, a little shy of the peak of its 0-11 session range.

• Softer than expected inflation data out of China and a negative session for Asia-Pac equities helped bias Tsys richer overnight, moving away from Thursday’s cheaps in the process.
• Asia-Pac steepener flow via an FV/US block looked like a partial unwind of flattener exposure put on earlier this week.
• Risk surrounding further escalation in Israeli-Palenstian matters is a prominent theme in early Friday discussions, after Israel’s forces told the UN to evacuate its personnel from northern Gaza.
• Outside of headline risk, preliminary UoM sentiment data and Fedspeak from Harker will cross ahead of the weekend.
• Terminal policy rate pricing sits ~9bp above prevailing rate levels (come January). Beyond there, ~56bp of cuts are priced through September ’24. The strip is off yesterday’s CPI-inspired hawkish extremes.