Muted Start, Curve Steepens On Friday

TYU3 deals at 110-07+, -0-04+, in line with Friday’s late NY levels in a muted start to the week's dealing.

• On Friday cash tsys finished 3bps richer to 5bps cheaper across the major benchmarks, the curve twist steepened pivoting on 5s.
• Tsys see-sawed in the aftermath of the latest NFP report, the headline jobs figure was the lowest in 3 years however Average Hourly Earnings were firmer than forecast. However recent ranges were respected and moves were modest.
• Chicago Fed President Goolsbee, generally considered a dovish FOMC member, noted that the projection for modest hikes in 2023 is reasonable. He reiterated comments seen in previous communique that the labour market remains strong and inflation hasn't come down as much as expected.
• FOMC dated OIS price ~25bp hike into the July meeting, a terminal rate of ~5.40% is seen in November. There are ~50bps of cuts priced in H1 2024.
• In Asia today official CPI and PPI from China provide the highlight. Looking ahead, the headline of this week's docket is Wednesday's June CPI print, headline CPI is expected to tick higher to 0.3% M/M from 0.1%.