Narrow Asia Trade

A muted round of Asia-Pac dealing sees TYU2 futures print -0-02 at 117-29 as we head towards London dealing, with the contract operating in the middle of a very narrow 0-04+ range, on volume of ~43K. Note that TYU2 experienced a brief and shallow show below its Tuesday base in early Asia-Pac trade, before ticking away from session lows. Cash Tsys sit 0.5bp richer to 1.0bp cheaper across the curve, with some light twist steepening observed.

• Hardline headlines out of China surrounding the U.S. naval presence in the Taiwan Strait did little to alter that particular narrative, while the continued uptick in new COVID cases in China failed to generate anything in the way of a meaningful market reaction.
• The proximity to impending central bank decisions, namely the FOMC (next Wednesday) & ECB (this Thursday) seems to be keeping may participants sidelined.
• Looking ahead, existing home sales data and MBA mortgage apps are due to cross on Wednesday, coming on the heels of softer than expected housing starts data and a building permits print that wasn’t quite as soft as expected, but was still negative in M/M terms. 20-Year Tsy supply is also due on Wednesday.