Light Bid After Softer Than Expected Chinese PMI Data

Tsys firm a touch on the back of a softer than expected Caixin manufacturing print out of China (49.2 vs. BBG survey median 49.8 & Dec 49.0). As we have flagged elsewhere, the survey highlighted softer falls in output and new orders, easing supply chain pressures & confidence around the outlook hitting the highest level seen since April 2021. Caixin suggested that “there is still uncertainty in how the pandemic will develop, so full preparation should be made to deal with the next wave of the virus. China will still need to effectively coordinate pandemic containment with economic and social development.” The post-ZCS momentum observed in the Chinese economy will be a key input for both global growth and financial markets in the coming months.

• TYH3 moves to a fresh session high, last +0-05+ at 114-22. although ranges in the space remain modest ahead of the impending FOMC decision. Cash Tsys run ~0.5bp richer across the curve.