Growth Worries Remain Evident

A flat re-open for TYM2, with the contract +0-03+ at 119-26, after going out around the middle of the session range on Thursday.

• To recap, the curve bull steepened on Thursday, with the major cash Tsy benchmarks finishing 2-7bp richer come the bell. The Asia-Pac selling pressure linked to positives surrounding the COVID situation in Shanghai abated with familiar domestic themes at the fore. Kohl’s became the latest retailer to provide disappointing earnings & guidance (although there was a rebound in that company’s stock on the day). Elsewhere, second tier U.S. data (Philly Fed survey, existing home sales and initial jobless claims) erred on the softer side, at least from a headline perspective, which helped the space to richen on growth worries. An NY morning block buy of UXY futures (+8,146) also fed into the bid. Tsys moved back from best levels as we worked through the day, with equities briefly moving into positive territory, before pulling lower into the close. A late TU/UXY block flattener (-18,418/+6,363) helped the wider curve move away from session steeps. A quick note that pre-NY trade saw another programme seller of FV futures (once again dealing in 5K clips) for a second consecutive day.
• Japanese CPI data and the latest round of monthly PBoC LPR fixings provide the focal points during the Asia-Pac session. Looking ahead, Friday’s NY session will be headlined by a Fox Business interview with St. Louis Fed President Bullard (’22 voter).