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Futures Better Bid On Fed Exp., Market Limited By Japanese Holiday

US TSYS

TYU2 deals +0-06 ahead of London hours, printing 118-26+, 0-03 off its session peak, although volume is sub-par running at ~35K lots, with the illiquidity inked to a Japanese national holiday and the resultant close of cash Tsys until London trade limiting wider activity.

  • Tsy futures drew support from Friday’s Fedpeak (where only ’22 voter Bullard pointed to the need for a potential 100bp rate hike later this month) and a weekend article from WSJ Fed whisperer Timiraos, who flagged that a 75bp rate hike is the most likely scenario come the end of the central bank’s July meeting.
  • Continued COVID worry in China, alongside an early downtick in crude oil futures, also fed into the early bid, although a subsequent recovery in the latter, alongside an uptick in e-minis & Chinese equities (which benefitted from the hope of apparent impending support for Chinese property developers, per weekend press reports surrounding comments from a CBIRC official) limited the early bid, with Tsy futures operating off of best levels into European hours as a result.
  • Looking ahead, only second tier domestic data is due later today, while the Fed has entered its pre-FOMC blackout period.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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