MNI ASIA MARKETS ANALYSIS: Green Light Means Go! Jobs Surge

US TSY SUMMARY: March Employ Surges +916k

Surge in March job gains, +916k vs. +660k est (private, +780k, govt +136k) and up-revisions for prior two helped push Tsy ylds to new one+ year highs while equities posted new all-time highs as well: S&Ps 4038.0.

• Initial chop, Tsys gapped higher after initially better selling, chalk that up to thin market conditions on shortened pre-Easter weekend participation. Much better March employ data finally sunk in a few minutes later as market pulled forward rate hike expectations sooner than later. Yield curves chop, 5s30s that dipped below 138.0 to 137.713 low.
• Focus more on economic recovery not inflation expectations one desk said as 5Y yields climb back to late Feb 2020 levels, 0.9738% highs. Expect further vol
• 3s and 5s back to the assumption of tighter Fed policy starting in April 2022 with a fast increase to 1.25% another desk said.
• CDC left parting message around the early close: green-lighting travel for those fully vaccinated: "fully vaccinated Americans can resume domestic and overseas travel as long as they wear masks in public," Politico reported.
• The 2-Yr yield is up 2.8bps at 0.1862%, 5-Yr is up 7.3bps at 0.9738%, 10-Yr is up 4.8bps at 1.7181%, and 30-Yr is up 3.1bps at 2.3627%.

SHORT TERM RATES

US DOLLAR LIBOR: No settles across currencies Friday and Monday due to Easter holiday

• Daily Effective Fed Funds Rate: 0.07% volume: $72B
• Daily Overnight Bank Funding Rate: 0.07%, volume: $95B

• Scheduled purchases resume next week:
• Mon 4/05 1100-1120ET: Tsy 0Y-2.25Y, appr $12.825B
• Tue 4/06 1010-1030ET: Tsys 20Y-30Y, appr $1.750B
• Wed 4/07 1010-1030ET: Tsy 4.5Y-7Y, appr $6.025B
• Thu 4/08 1010-1030ET: TIPS 1Y-7.5Y, appr $2.425B
• Fri 4/09 1010-1030ET: Tsy 7Y-20Y, appr $3.625B

EURODOLLAR/TREASURY OPTIONS SUMMARY

• -20,000 short Sep 95 puts, 6.0 (open interest >232k)
• -2,700 short Sep 99.562 puts, 8.0
• +25,000 Red Dec 93/96/98 2x3x1 put flys, body over for 1.0 net
• -10,000 Blue Sep 81/83 2x1 put spds 7.5
• 1,000 short Dec 93/96 put spds vs. 97 calls, ongoing put skew theme
• 7,500 Red Dec'22 92/95 put spds, 7.0
• 10,000 Blue Jun 98.37/98.62 put spds, 12.0 vs. 98.49/0.22%
• 10,000 Blue Jul 98.12/98.50 put spds, 17.5 vs. 98.32/0.30%
• +1,500 Blue Apr 82/83/86 broken put flys

• +2,300 TYK 129/129.5/130/130.5 put condors, 6; Better buyers of various May 10Y put flys and condors noted last couple weeks, 129 low-strike leg in common
• 2,500 TYM 129/131 put spds 1 over TYM 132.5 calls, prior to blip higher in underlying
• Ongoing interest in weekly midcurves ahead this morning's March employ data
• 4,000 wk1 TY 130.5/130.75/131.25 broken put flys, 8
• 2,500 wk1 TY 130.25/130.5 put spds
• 1,000 wk2 FV 123/124 strangle or combo

USD, EQUITIES

DATA REACT: USD, Yields Firm Slightly Post-Payrolls

• Greenback saw short-lived strength upon release, with EUR/USD fading briefly through the 1.1760 level before the rate stabilized just a few pips below pre-data levels. Market clearly taking the lead off the better-than-expected job gains, but the positive revisions to the previous also adding a tailwind here.

• Stock futures break higher still, new all-time highs printed in the e-mini S&P at 4034.50 on release, 4038.0 high
  
• Initial USD response already fading, with EUR/USD now above pre-data levels although USDJPY pretty much unchanged.