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Little Changed To Cheaper In Light Asia Trade

US TSYS

The cash Tsy curve has bear flattened in early dealing this week, with the front end of the curve likely showing some regional Asia-Pac reaction when it comes to Friday’s front end/belly-led cheapening, while the 7+-Year zone of the curve was a little better bid on the risk negative factors we have outlined in the weekend news (namely softer than expected Chinese PMIs & worry re: various areas of geopolitical tension), before that impulse faded. That leaves cash Tsys little changed to ~1.5bp cheaper across the curve. TYM2 is -0-13 at 118-24, 0-01+ off the base of the contract’s 0-07 Asia range, operating on volume of ~85K.

  • Eurodollar futures sit 1.5 to 5.5 ticks softer through the reds.
  • Note that the OIS strip currently prices a ~50% chance of a 75bp hike at the Fed’s June meeting, in line with market pricing observed on Friday (a 50bp hike at this week’s FOMC meeting is fully priced).
  • Market and headline flow has been limited by the observance of holidays across China, Hong Kong & Singapore.
  • Looking ahead, ISM manufacturing data headlines the NY docket on Monday, although more focus will be placed on Wednesday’s FOMC decision and Friday’s NFP print.
  • Note that the observance of a UK holiday during London hours will limit wider liquidity and result in a halt of cash trade until NY hours commence.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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