Futures Lower As Oil Firms On Iran-Israel Tension

Tsy futures ultimately tick lower to start the week, but edge away from worst levels, with TYH3 last unch. at 114-19+.

• Higher oil prices, stemming from geopolitical worry re: Iran & Israel was the likely source of the modest downward pressure early on, after a couple of Iranian facilities were attacked by drones over the weekend, with Israel the likely offender.
• Elsewhere, weekend news flow saw U.S. Tsy Sec. Yellen continue to highlight her worry re: fiscal matters and the threat of default, while WSJ Fed watcher Timiraos highlighted a debate within the central bank re: whether wages or low unemployment will drive inflation.
• A reminder that Friday saw slightly softer than expected real spending and UoM inflation expectations, along with a step down in the rate of inflation outlined via the Dallas Fed’s trimmed mean PCE metric. That left benchmark Tsys running 2bp cheaper to 2bp richer at the close, as the curve twist flattened and the space unwound most of the pre-NY cheapening that was largely inspired by firmer than expected Tokyo CPI data from Japan.
• The return of Chinese markets will garner most of the interest in Asia-Pac hours, while the Dallas Fed m’fing activity release headlines the domestic docket on Monday. A slew of global central bank decisions, headlined by the FOMC, present the major risk events this week, while the ISM surveys, NFPs, quarterly refunding announcement and ECI data will filter out during the coming the days.