Futures Modestly Firmer To Start The Week

Tsy futures trade on a firmer footing to start the week, with TYZ2 +0-03+ at 110-22+.

• We attribute this to two factors (fleshed out in our earlier NZGB bullet):
• 1)Weekend Fedpseak from Bullard which pointed to a more data-dependent Fed in ’23 (with risks to policy rates a little more two-way than in ’22).
• 2)More measured/realistic fiscal rhetoric out of the UK over the weekend
• Chinese President Xi’s weekend address in front of the Communist Party Congress provided no real shocks, with no movement in COVID policy, and views re: Taiwan & Hong Kong reaffirmed.
• A reminder that cash Tsys cheapened by 3.0-7.5bp on Friday, with weakness in UK Gilts (participants not impressed by UK PM Truss’ latest address and the end of the BoE’s temporary Gilt purchase scheme) applying pressure late in the London day.
• We also saw a firming in both the 1- & 5- to 10-Year inflation expectations component in the UoM survey.
• Elsewhere, the latest primary dealer survey saw the Tsy quiz dealers on potential buybacks to improve liquidity in off-the-run paper.
• Asia-Pac hours will see focus on the fallout from Xi’s weekend address, while participants remain on the lookout for the delayed Chinese trade balance data. NY hours will see the Empire m’fing survey cross, with little else of note slated on the U.S. docket.