Off Lows After Softer Than Exp. Official Chinese PMI Readings

T-Notes have edged away from lows in Asia. Regional participants were happy to sell Tsys at the cash re-open even as e-minis ticked lower (ESM1 back below 4,200), before softer than expected official Chinese PMI data helped the space form a base. The cash Tsy market was closed during yesterday's Asia-Pac session, owing to a Japanese holiday, with the same story in play Monday through Wednesday of next week (with a Chinese market holiday also set to sap liquidity over that period). T-Notes last -0-02 at 131-29+, operating in a 0-05+ range, with recent trade seeing a 3,750 lot block seller at the current market price. The cash space trades little changed to 1.0bp cheaper across the curve.

• As a reminder, T-Notes recovered from worst levels of the day on Thursday. Cash trade saw the space finish little changed to a touch cheaper on Thursday, with the 7- to 10-Year sector providing the weak point on the curve, cheapening by ~2.5bp on the day. Early NY focus fell on record highs for the S&P 500 and a rally in commodities (namely oil & copper), although those moves were at least partially pared, allowing Tsys to recover from intraday cheaps. On the local data front, firmer than expected personal consumption data was seen, while continuing claims continued to nudge lower. The headline Q1, A GDP reading wasn't quite as strong as expected, while pending home sales missed exp. STIR markets provided the main attractions on the flow side, with interest in the 3EU1 98.00/99.00 risk reversal (buying 98.00 puts and selling 99.00 calls) continuing to swell. Most are equating this to a bet that some form of Fed tapering message becomes apparent at the Fed's annual Jackson Hole Symposium. Elsewhere, a near 20K seller of FFM1 was seen at 99.915, likely representing positioning for an IOER hike from the Fed.
• The PCE data suite and Chicago PMI readings headline the local docket on Friday, with an address from Fed's Kaplan also due.