Holding Pattern Into NFPs

There hasn’t been much to write about for Tsys during a holiday-thinned pre-NFP Asia session, outside of the modest uptick that we flagged earlier (seemingly linked to a reaction to USD/CNH pulling lower), which has since faded. TYU2 sits within the confines of the 0-06 range established in early Asia-Pac dealing, last -0-01 on the day at 118-26+. Cash Tsys run 0.5-1.5bp cheaper across the curve, with the front end leading the way lower. Asia-Pac flow has been dominated by misweighted FV/TY block flatteners (3x -5K/+5K) for a second consecutive session.

• Pre-NY trade will be thin on Friday, owing to the observance of the previously alluded to holidays in London, Hong Kong & China.
• Still, the monthly NFP print provides plenty of event risk ahead of the weekend (see our full preview of that release here).
• Friday will also bring the release of the latest ISM services survey and further Fedspeak from Brainard (although her address will focus on the Community Reinvestment Act, which likely limits the scope for meaningful policy discussion). Note that the Fed goes into its pre-meeting blackout ahead of the weekend.
• President Biden will also make his usual post-NFP address on the labour market, after Thursday saw a White House official note that “as we transition to this new period of stable, steady growth, we aren't looking to see blockbuster job reports month after month, like we have over the last year.”