Parallel Cheapening, 10+-Year Yields Hit Fresh Cycle Highs In Asia

TYZ3 ticks back towards overnight lows, -0-03+ at 108-02, after yesterday’s break and close below prior cycle lows in the contract.

• Bears now look to 108-00, which is round number support. A move beyond there would expose 107-23, the 1.236 projection of the Jul 18-Aug 4-Aug 10 price swing.
• Another round of fresh cycle highs was seen in 10+-Year yields during Asia-Pac hours.
• Tsys sit ~2bp cheaper across the curve, in a parallel move.
• This comes after the 2s10s curve closed above -60bp yesterday, printing at the least inverted level seen since late May.
• 5s30s managed to dis-invert again yesterday and operates just off multi-week steeps at tightening.
• The NY-Asia handover saw Minneapolis Fed President Kashkari note that he expects one more rate hike in the cycle, along with stressing the need to keep policy tighter for longer if the economy proves to be stronger than expected.
• Government shutdown matters remain in focus. Monday saw Moody’s warn that such an occurrence would be credit negative for the U.S., and “demonstrate the significant constraints that intensifying political polarization continue to put on US fiscal policymaking during a period of declining fiscal strength, driven by persistent fiscal deficits and deteriorating debt affordability.”