Futures Lower On Monday, Cash Re-Open Eyed

Tsy futures were pressured during holiday-thinned Monday trade, with cash markets closed owing to the observance of Columbus Day.

• An early, limited bid was seen on soft Chinese Caixin Services PMI data, Friday’s ratcheting up of Sino-U.S. tensions surrounding the tech space and headlines re: the ongoing Ukraine-Russia war.
• Still, a fresh round of Gilt market worry, as the UK government formally rolled forward the release of the OBR’s forecasts in lieu of the recent “mini” budget (and despite the BoE deploying further mitigation measures to support Gilt market functioning and financing for the LDI pension fund community), coupled with the previously alluded to fiscal rumours surrounding the joint EU financing of debt to counter the ongoing energy price surge, applied pressure.
• Fed Governor Brainard pointed to the need for continued tightening, with restrictive policy needed for some time, although she gave more of an acknowledgement to the lagged impact of monetary policy than some of her colleagues.
• Tsy futures finished off lows, with European fiscal headlines dominating in NY hours.
• Looking ahead, the re-open of cash Tsy trade after the elongated weekend will provide the focal point in Asia.
• Tuesday’s NY docket will see the NFIB small business optimism index, Fedspeak from Mester and 3-Year Tsy supply.