Gilt Weakness Limits Recovery From Asia-Pac Lows

The aforementioned weakness in gilts limits the uptick in Tsys, pushing the space away from best levels.

• A reminder that TYH4 breached Wednesday lows early In Asia hours before recovering.
• There wasn’t much in the way of meaningful spill over from the weakness in JGBs.
• TYH4 prints +0-00+ at 110-31+, sitting the middle of a 0-09 range on healthy volume of ~226K.
• Support at the Jan 19 low (110-26) remains intact, as does the bearish technical threat.
• Cash Tsy yields are little changed to 1bp lower, with a light flattening bias observed.
• A reminder that a poorly received round of 5-Year Tsy supply allowed the post-S&P Global PMI weakness in the space to extend further on Wednesday. The longer end came under further pressure as previous YtD highs in 30-Year yields were breached.
• FOMC-dated OIS shows ~11bp of cuts through March ’24, with a total of ~134bp of cuts priced through ’24 at present.
• Weekly jobless claims, durable goods and Q4 GDP present the data highlights in NY hours, with 7-Year Tsy supply set to follow yesterday’s poorly-received coupon offering. Participants also eye the latest ECB decision.