NFPs Near

A flat re-open for TYU2, last -0-06+ at 120-17, after edging away from best levels into the NY close.

• To recap, the wider cash Tsy curve twist steepened on Thursday, with the space pulling away from lows as the BoE delivered the widely expected 50bp rate hike and sounded the alarm re: the health of the UK economy in the immediate term, predicting a recession alongside a marked shift higher in near-term inflation expectations, while noting that it remains willing to act forcefully if necessary. An inline with exp. uptick in initial jobless claims and larger than expected uptick in continuing jobless claims also played into the bid in early NY trade.
• Elsewhere, Cleveland Fed President Mester (’22 voter) noted that she is undecided when it comes to the appropriate path for interest rates come the end of the September FOMC, while she suggested that the June SEP had the tightening trajectory “about right,” as she highlighted her preference for a terminal rate of “a little above 4%.”
• Chinese activities around Taiwan continued to garner attention, with rockets launched over the island, some of which landed inside Japan’s EEZ.
• Still, volume was relatively limited ahead of Friday’s NFP release.
• Flow in the U.S. rates space was dominated by a block flattener of SFRZ2/Z3 futures (-57K) which seemed to be a partial unwind of a pre-FOMC steepener play (+67K).
• The aforementioned NFP print headlines the NY docket on Friday (see our full preview of that event here), with Fedspeak from Barkin (’24 voter) also due.