Flatlining To Start After Friday’s Light Cheapening

TYM3 is flat at the re-open, given the lack of market-moving news flow over the weekend, leaving the contract unchanged at 114-15, operating a little above Friday’s NY low.

• Cash Tsys cheapened by 3-4bp come Friday’s close, with firmer than expected S&P Global PMI data more than reversing the early, modest richening that was observed. The data also pulled a little of the Fed cuts priced in by year end out of the FOMC-dated OIS space.
• Late Friday saw Fed Governor Cook point to the well-documented debate re: economic strength vs. bank stress when it comes to her decision at the May FOMC, with a hat tip to the potential for a tightening of the credit channel impacting the overarching rate path. On the other hand, Cook also noted that the central bank may have more work to if the economy shows continued strength, while flagging broad-based inflation. She also stressed that the road back towards lower inflation will be “long and bumpy.” All in, Cook’s comments were non-committal and covered well-trodden areas of Fed debate. This was the final round of Fedspeak ahead of the pre-FOMC blackout, which went into play over the weekend.
• There isn’t anything in the way of meaningful risk events to flag when it comes to Asia-Pac hours, with activity indicators from the Chicago & Dallas Feds providing the highlight of the U.S. data docket on Monday.