Pressured In Early Trade After Curve Bear Flattened On Friday

TYH3 deals at 114-08+, -0-05, testing Friday's base.

• The latest piece from WSJ Fed whisperer Timiraos has noted that "fresh signs of a hot U.S. labor market leave the Federal Reserve on course to raise interest rates by a quarter percentage point at its meeting next month and to signal another increase is likely after that." That, coupled with regional reaction to Friday's NFP print, is outweighing Sino-U.S. tension.
• Cash Tsys closed 6-18bp cheaper on Friday, as the curve bear flattened.
• A surge in job gains, alongside the the unemployment rate reaching its lowest level since 1969 pressured Tsys.
• Losses extended as the ISM Services survey printed its largest increase since June 2020.
• OIS markets now see the terminal rate above 5%, with ~25bps of hikes priced into the March meeting.
• SF Fed President Daly was the first Fed speaker after the blackout period ended, calling the NFP print a “Wow” number. She reiterated themes observed in previous communique i.e. it is too early to declare victory against inflation, noting she is prepared to do more if it is needed.
• We have a thin calendar in Asia-Pac today with rising geopolitical tensions and the fallout of the Nikkei report re: BoJ Deputy Gov Amamiya being approached to head up the central bank likely to dominate. Further out, lower tier data is all that we get on the NY docket.