Flat Start, Sino-U.S. Tensions Eyed

TYU2 operates around late NY levels, with the space looking through the latest U.S. delegation journeying to Taiwan, hot on the heels of House Speaker Pelosi’s recent visit. The 5-memebr group of lawmakers touched down in Taiwan on Sunday. The contract last deals +0-04+ at 119-13.

• As a reminder, the cash Tsy curve twist flattened on Friday, with the major benchmark Tsys running 2.5 cheaper to 7.0bp richer come the bell, pivoting around the 3- to 5-Year zone.
• Hawkish Fedspeak from Richmond Fed President Barkin (’24 voter) and an unexpected uptick in the 5- to 10-Year inflation expectations component of the prelim. UoM sentiment reading provided some cheapening pressure during the first half of NY trade, pulling the space away from best levels after some early richening. The beat in the headline UoM print also helped, although the index remains at depressed levels. The space moved away from post-data cheaps ahead of the bell, with the longer end of the curve registering richest levels of the day into the close.
• A post-data block sale of FV futures (-25,023) and TU/UXY block flattener (-11,421/+3,960) provided the standout market flow ahead of the weekend.
• Chinese economic activity data and the latest round of MLF operations rom the PBoC headline the Asia-Pac docket on Monday. Further out, Monday’s NY docket will see the release of Empire manufacturing and NAHB housing market data.