Light Twist Steepening In Asia, Contained Ranges Observed

TYM3 is mid-range into London hours last dealing -0-02+ at 114-16 on light volume of ~51K. Meanwhile, cash Tsys sit 1.5bp richer to 1.5bp cheaper as the curve twist steepens, pivoting around 7s, unwinding some of Thursday’s light twist flattening.

• There wasn’t an overt driver re: the light richening away from cheapest levels of the day, so we would point to a move away from cheaps in JGBs as a likely driver.
• Note that e-minis have been better bid all session. Here we would point to the slight reduction in the Fed’s balance sheet size (and feedthrough into less worry re: the banking sector) and month- & quarter-end rebalancing flows (touted flows out of bonds into stocks) as potential drivers for the early Asia cross-market moves, as well as Asia-Pac reaction to Thursday’s wider market swings.
• Firmer than expected official PMI data out of China then applied further pressure, before the aforementioned light, JGB-derived bid became apparent.
• There wasn’t much in the way of market reaction to news that former President Trump is set to be indicted re: the well-documented ‘hush money payments’ he is alleged to have made.
• Eurozone CPI & U.S. PCE data are set to provide the focal points on Friday. Elsewhere, we will get the latest MNI Chicago PMI print and final UoM sentiment data, in addition to Fedspeak from Waller, Williams & Cook (Waller crosses a few hours after the market close).