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Late Equity Roundup: Mildly Lower on Week


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Tsy futures were pressured from the off in Asia-Pac trade (cash markets are closed until the London open owing to a Japanese holiday), as the region reacted to Friday’s post-NFP moves and greater chances of further fiscal stimulus in the U.S. This outweighed China-related COVID worry and reports out of Cyprus pointing to several cases of a combination of the Delta & Omicron COVID strains. The latter had little lasting impact on broader risk appetite, with the scientist that flagged the developments having to downplay speculation that the combination came about on the back of contamination in the testing lab. TYH2 -0-08 at 128-01+ as of typing, after the contract threatened to test the psychological 128-00 level at one point overnight.

  • On the sell side, Goldman Sachs frontloaded their Fed rate hike view (now looking for 4x 25bp hikes in ’22 vs. 3x previously), while they rolled forward their call re: the start of B/S normlisation on the part of the central bank.
  • A screen seller of the EDH4/M4/U4 butterfly {~5K) headlined on the flow front.
  • To recap, solid undertones in the latest NFP report (despite a headline miss as NFPs printed at 199K vs. a median 450K), coupled with expectations for a continuation of brisk $IG supply in the coming week, weighed on the Tsy space on Friday. The space pulled away from session cheaps as we moved through NY trade, with the 1.80% level holding in 10-Year yields. Bear steepening of the curve was at the fore, with 2s little changed on the day, while 10+-Year paper was ~4bp cheaper on the day.
  • There isn’t much of note on the U.S. docket on Monday, which may mean that any rumblings from the Russia-related discussions in Geneva may receive higher scrutiny vs. the norm.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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