Off Cheaps, Although Still Softer On The Day Pre-NY

Tsys have consolidated a little off session cheaps after the initial cheapening burst in EGBs around the old Eurex futures open allowed all of the major cash Tsy benchmarks to move beyond Friday’s yield peaks (some had already done so in Asia-Pac hours). Some fresh weakness was then seen around the Gilt open before momentum waned.

• That leaves the major cash benchmarks running 4.0-5.5bp cheaper, with the 5- to 10-Year zone leading the weakness.
• TYU3 is -0-11+, 0-03 off the base of its 0-12 range.
• Macro headline flow has been a little limited, save the mark lower in the final Eurozone services PMI (to a still more than healthy 55.1).
• FOMC-dated OIS shows ~7bp of tightening for this month’s meeting and a cumulative 20bp of tightening through July, little changed to a touch softer vs. late Friday levels. Beyond July, 26bp of cuts are priced by year-end.
• The ISM services survey provides the focal point of the NY docket.