Off Worst Levels In Narrow Trade

Cash Tsys have stabilised a little, perhaps aided by the cross-asset impulse from another sharp pull lower in USD/JPY which seemed to lack anything in the way of a major fresh headlines (the move in JPY crosses may be viewed as catch up to the previously outlined risk-negative headlines that crossed over the weekend).

• This seem to allow Tsys to find a bit of a base, with the major cash benchmarks running little changed to 2bp cheaper at writing, with bear flattening still in play. TYU2 deals -0-01+ at 131-02+, operating in the middle of its limited 0-06 range.
• There hasn’t been anything in the way of meaningful reaction when it comes to a slightly softer than expected Caixin manufacturing PMI print out of China (50.4 vs. BBG median 51.5), which came on the heels of the unexpected contraction in China’s official PMI release, which hit over the weekend. In the detailed release Caixin noted that “in general, the eased Covid situation and restrictions facilitated a continuous recovery in the manufacturing sector in July. Supply and demand continued to improve, with supply stronger than demand. Employment lagged, remaining in contractionary territory. Costs gradually rose, with output prices on the decline, posing challenges for company profits. The market held on to positive sentiment, along with concerns about the economic outlook.”