Opening Gap Higher Fades

Tsy futures gapped higher at the re-open, but have pulled back from best levels, leaving TYH3 at 112-13+, +0-04, just off the base of the early 0-08 range. A bid in e-minis (which has also faded a little) provided a trigger, with the weekend’s softer than expected official Chinese PMI data also lending a hand. Going against that grain will have been some hawkish ECB speak and speculation re: the potential for a hawkish adjustment to the BoJ’s inflation forecasts, which also crossed over the weekend.

• A reminder that cash Tsys are closed until the London session due to the observance of a Japanese holiday, which will thin out broader liquidity in Asia-Pac hours.
• Cash Tsys finished 5-7bps cheaper across the major benchmarks on Friday. MNI Chicago PMI printed stronger than expectations. Tsys rallied off lows in Friday's NY session as year-end portfolio re-balancing briefly eased pressure before paring gains to finish the session cheaper.
• The Caixin PMI manufacturing print from China highlights an otherwise thin Asia-Pac docket today, further out we have German state and national CPI readings. The U.S. highlights of the week include the NFP report, minutes from the December FOMC meeting & monthly ISM surveys.