Modest Downtick In Asia

Cash Tsys run 0.5-1.5bp cheaper at typing, with intermediates leading the weakness. TYZ2 is -0-02+ at 109-18, 0-04 off the base of its 0-09 range on solid volume of ~95K. TY futures failed to test initial technical support in the form of Friday’s low during Asia dealing.

• Screen-based sales in TY futures helped Tsys to cheapest levels of the session, with the move facilitated by news that Macau is to ease entrance rules for foreigners from Nov. 13.
• Some participants were leaning on the idea that this points towards an eventual loosening of ZCS restrictions in mainland China given recent speculation surrounding that matter. However, some caveats around the Macau headlines that were a little more restrictive than the initial headline suggested limited the move lower in Tsys.
• A fresh downtick in Chinese equities during early afternoon trade (that move was initially aided by another multi-month high for new Chinese COVID cases) allowed Tsys to stabilise off of lows into European hours.
• Antipodean FI dynamics had provided some cheapening pressure earlier in the session.
• Tuesday’s NY slate includes the release of NFIB small business optimism data, as well as 3-Year Tsy supply. Further out, the results from the mid-terms (with opinion polls pointing to the GOP taking the House, and maybe the Senate) and the CPI print provide this week’s key domestic risk events.