FV Block Flow Headlines In Asia

The U.S. Tsy space was much calmer than what was witnessed during Thursday's NY session. T-Notes registered an incremental fresh session low as Chinese equity indices pared their initial post-Chinese data dip (Chinese data was predictably strong in Y/Y terms, although a little more mixed vs. exp.), which came after a pullback from best levels in late NY hours. Some pockets of TYM1 buying then showed their hand helping the contract off lows, before a tick back to worst levels. TY -0-09 at 132-12 at typing, 0-01+ off lows, holding to a 0-05+ range overnight, with cash Tsys unchanged to 0.5 bp cheaper across the curve. Block flow was headlined by 20K of FVM1 124.25 call selling and what looked like 15K of FVM1 123.75 call selling (this may have represented a seller of the relevant 3x4 call strip). Elsewhere, there was what seemed to be a 2,275 block sale of UXYM1.

• As a reminder, there was a solid bid for Tsys during most of Thursday's NY session, although momentum waned into the bell, allowing T-Notes to correct from best levels of the day. Cash trade saw outperformance for the 7- to 10-Year sector of the curve, which richened by around 5.5bp come the close. The pullback from intraday lows in yields was seemingly aided by a round of selling in futures, covering maturities from FV all the way out to US & WN. 10-Year Tsys had traded as much as ~11bp richer on the day, with focus on U.S.-Russia tensions, as the former imposed fresh sanctions on the latter, while desks pointed to short covering also being in play. Elsewhere, hedging surrounding issuance from U.S. financials in the wake of earnings releases (J.P.Morgan came to market with $13bn of supply) and focus on Japanese foreign bond buying after the turn of the Japanese fiscal year also supported the space. Generally strong to solid domestic economic data helped equity markets to fresh record highs, but didn't hinder the rally in Tsys, showing the sort of expectations re: the domestic economy already baked into the bond market, with resilience aided by the Fed's well-documented on hold stance.
• Housing starts, building permits & UoM sentiment headline the local economic data docket on Friday, with comments from Dallas Fed President Kaplan also due.