Little Changed To Start After Friday’s Bear Flattening

TYM3 operates around late NY levels as Asia-Pac participants assess Friday’s price action, weekend ECB speak and familiar sources of geopolitical tension.

• Tsys finished cheaper Friday, with a cocktail of firmer than expected core and control group retail sales data (which was still negative in M/M terms and came alongside softer than expected headline prints), a jump in 1-Year inflation expectations in the latest UoM survey and firmer than expected industrial production data generating bearish impetus.
• Comments from Fed Governor Waller added further bearish pressure.
• The curve bear flattened as yields finished 5-13bp firmer, with the space closing a little off session cheaps. Desks flagged real money a/c selling in the front end. TYM3 failed to test its month-to-date base.
• FOMC-dated OIS finished showing just over 20bp of tightening for May, briefly printing above 22bp post-retail sales. A cumulative ~25bp of tightening was priced over the May & June meetings at the close, with just over 60bp of cuts priced through the end of ‘23.
• The latest PBoC MLF operations headline in Asia-Pac hours, while Empire Manufacturing & NAHB housing market readings will be seen in the NY session. We will also get central bank speak from BoE’s Cunliffe & ECB’s Lagarde later on Monday.