Muted Open, Yields Fall On Friday After U.S. Data Prints

TYH3 deals at 114-09 a touch above Friday's settlement level. A reminder that cash tsys are closed until the London session due to the Japanese holiday today.

• Cash Tsys finished Friday 10-22bp richer, bull steepening as the front end of the curve drove the bid.
• Tsys rallied on a mixed NFP Report, as the unemployment rate unexpectedly fell to a 53 year low, however, the weaker than expected AHE & a downward revision to November's earnings provided the catalyst for the bid in the space.
• The rally extended as the ISM Services Index printed significantly lower than estimates, revealing a surprise contractionary headline outcome, as the new orders sub-index cratered.
• There were several Fed speakers post-data. Atlanta Fed President Bostic and Richmond Fed President Barkin both reiterated themes observed in recent communique. Meanwhile, Gov. Cook highlighted several signs of easing inflationary pressure, including decelerating wages gains, while emphasizing that inflation remains too high.
• Fed dated OIS is pricing ~32bp of tightening for the Feb ’23 meeting, falling 6bps on Friday as the market digested the data. Terminal rate pricing also ticked lower, now sitting below 5.00%.
• In the week ahead, Thursday's December CPI print provides the highlight. Atlanta Fed President Bostic and SF Fed President Daly are on the wires today, although participants are looking ahead to Chair Powell's Tuesday remarks when it comes to Fedspeak.