Pickup In Equities Weighs On Tsys

TYU2 took out Friday’s low in overnight trade, with the contract last dealing -0-07 at 117-04, 0-01+ off the base of its overnight range, on sub-standard volume of ~63K lots. Meanwhile, cash Tsys run 0.5-4.0bp cheaper as the curve bear steepens.

• Firmer equities and a rally in the major Asia-Pac equity indices allowed the Tsy space to cheapen in overnight dealing, after a lacklustre round of early trade. The Chinese COVID situation and the impending resumption of indirect U.S.-Iran nuclear talks were positives for wider sentiment (with a strong lead from Friday’s Wall St. session also supporting), while the ongoing G7 gathering presents continued headline risk as the respective leaders discuss a potential oil price cap for Russian crude. This comes after the group agreed on ban on fresh Russian gold imports, while Russia has seemingly been forced to default on payments surrounding two foreign-currency denominated bonds. Note that e-minis and oil more than reversed early losses as regional equity benchmarks rallied.
• A block buyer in FVU2 (+2.0K) headlined on the flow side during Asia-Pac hours.
• Looking ahead, the NY session will see the release of prelim. durable goods data, pending home sales and the latest Dallas Fed m’fing activity reading, in addition to 2- & 5-Year Tsy supply (owing to the holiday-shortened week).