Modestly Cheaper To Start

Tsys have been subjected to modest selling pressure in early Asia-Pac dealing, as the region reacts to Wednesday’s developments, which saw fresh cycle highs for yields across the term structure.

• TYZ2 has looked through Wednesday’s low, although there hasn’t been much in the way of forceful extension, with the contract last dealing -0-05 at 109-27, at the base of its 0-05 range. The 30 Nov ’07 low at 109-23+ provides immediate technical support, with the well-defined downtrend remaining well and truly intact. A break below that level would open the way to the 1.00 projection of the Oct 4-11-13 price swing (108-18+).
• Cash Tsys run ~1bp cheaper across the curve.
• Fed’s Evans once again pointed to the need for further monetary tightening, highlighting the central bank's focus on the inflation fight in the process.