Marginally Cheaper In Asia, PCE Due Before Christmas

Tsys were biased lower overnight on the Asia-Pac reaction to Thursday’s cheapening in wider core global FI markets, leaving TYH3 -0-06+ at 113-11 into London hours, 0-01 off the base of its narrow 0-05+ range, on modest volume of ~46K. Cash Tsys sit 0.5-1.5bp cheaper across the curve, with marginal bear steepening in play.

• Tsys ticked lower alongside an uptick in the USD & weakness in e-minis during the early rounds of Asia-Pac dealing, with cross-asset flows at the fore, before stabilising as e-minis pared losses and the broader DXY moved back to neutral levels.
• Macro headline flow was fairly limited, with an as expected uptick in Japanese inflation, comments from President Biden stressing that inflation will take some time to normalise and the usual rounds of critique out of China re: U.S. views/actions towards the country all noted.
• Looking ahead PCE readings provide the focal point of Friday’s NY session, although this will of course come against a thinner liquidity backdrop owing to the time of the year, which will limit risk taking capabilities/desire.
• Tsys will be subjected to curtailed trading hours ahead of the Christmas weekend (see earlier bullet for more details).