Modest Overnight Losses Seen, NFP Dominates

Tsys hold modest overnight declines as the major cash benchmarks sit little changed to 2bp cheaper, with the intermediate zone leading the weakness. TYU3 is -0-03, 0-01 off the base of its narrow 0-05 range.

• A bounce in Chinese equities and hawkish repricing of RBA OIS were front and centre when it came to fuel for the contained move witnessed in Asia-Pac hours.
• The monthly NFP release dominates the wider macro docket ahead of the weekend (see our full preview of that event here).
• Yesterday’s revised ULC print and softer than expected prices paid component in the ISM manufacturing survey, combined with the recent dovish overtures from Fed’s Jefferson & Harker, leave FOMC-dated OIS shy of their recent hawkish extremes. ~7bp of tightening is priced in for this month’s meeting and a cumulative 18bp of tightening priced through July. Beyond that, ~41bp of cuts are priced by the end of ’23.
• Note that there is no Fedspeak scheduled before the blackout period goes into effect this weekend.