Off Best Levels Into NY Trade

Tsys have pulled back from best levels alongside wider core global FI markets.

• Cash Tsys run little changed to 2bp richer, with 5s outperforming on the curve.
• TYZ3 is around mid-range, last +0-04.
• The initial Asia-Pac bid, coupled with early London reaction to the move and an extension of the recent dovish BoE repricing, then provided a second round bid in the Asia-London handover.
• Asia-Pac highs in TYZ3 remain intact after the contract pushed above pre-ISM Services levels.
• As we noted elsewhere, the Asia-Pac bid was seemingly linked to a combination of Nikkei 225 & USD weakness. The latter came on the latest thinly veiled FX intervention threats out of Japan, although that isn’t a U.S. Tsy positive from a flow perspective.
• Terminal pricing on the FOMC-dated OIS strip still hovers around 5.44%, with ~37bp of cuts then showing through June ’24.
• Lower tier domestic data and comments on payments innovation from Fed’s Barr are unlikely to do much for markets in NY hours.