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FOREX

AUD/CNY: Westpac: Yuan Fundamentals Remain Strong

GOLD

In The Recent Range

JGBS

2-Year JGB Supply Passes Smoothly

JGBS AUCTION

2-Year Auction Results

US TSYS

Off Asia Cheaps

US TSYS

T-Notes operate just shy of their late NY highs, last +0-01 at 132-01. The space richened on Thursday, which filtered into fresh record highs for the S&P 500. 20s outperformed on the cash curve, firming by ~7bp on the day. The real leg of outperformance in 20s came later in the day (richening by a little over 4bp on the 10-/20-/30-Year butterfly) as NY Fed Exec VP Logan noted that "the introduction of the 20-year Treasury bond has increased amounts outstanding around the 20-year maturity point"…"With net issuance expected to remain high in the near term, we anticipate that the composition of outstanding supply will continue to evolve. As a result, we plan to make minor technical adjustments to our purchase sectors and increase the frequency at which we update purchase allocations to remain roughly proportional to the outstanding supply of nominal coupon securities and TIPS. We expect to announce these as a part of a normal purchase calendar release in coming months." Markets subsequently moved on the idea that the Fed is set to up 20-Year Tsy purchases. Geopolitical tensions surrounding Russia & Ukraine were seen as a supportive factor earlier in the day, with CNN suggesting that the U.S. is considering sending warships into the Black Sea as a show of support for Ukraine.

  • Fed Chair Powell & St Louis Fed President Bullard offered little new, while Minneapolis Fed President Kashkari hammered home the focus on underlying as opposed to transitory inflation.
  • Logan also noted that the Fed will offset downward pressure on money market rates by focusing policy adjustments on its overnight reverse repo facility including possibly expanding counterparty eligibility in coming months.
  • Late NY trade saw 12K green packs lifted on block.
  • There isn't much in the way of outright tier 1 risk slated for Asia-Pac hours, with Chinese inflation data and the RBA's Financial Stability Review headlining.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com