Marginally Cheaper Ahead Of London Hours

Tsys softened as we worked our way through Asia trade, with the early, modest bid that was a result of spill over from NY dealing and/or cross-market support from rallying ACGBs fading in the wake of a much firmer than expected non-manufacturing PMI reading out of China. That leaves TYU2 -0-00+ at 117-16, 0-02 off the base of its 0-07+ range, operating on volume of ~70K lots. Meanwhile, cash Tsys run little changed to 1bp cheaper across the curve.

• In terms of the general feel of the Chinese data, the m’fing PMI provided a slight miss (50.2 vs. BBG median 50.5) while the non-m’fing PMI came in well above expectations (54.7 vs BBG median 50.5), with the NBS suggesting that the economy bottomed in May.
• There hasn’t been much in the way of major macro headlines to digest since the Chinese PMIs crossed.
• A modest round of screen buying in TYU2 futures (+2.5K) provided the highlight in a relatively limited round of Asia-Pac dealing.
• Thursday’s NY session brings the latest round of monthly PCE data, the MNI Chicago PMI print and weekly jobless claims readings. It also represents the last full session before the Independence Day weekend, with a market closure in Hong Kong also set to hamper liquidity on Friday.