Richening Holding; CPI, FOMC In Focus

TYH3 deals unchanged on the day at 114-03, after ticking away from best levels, operating in a 0-09 range on sub-par volume of ~64k.

• Cash Tsys are dealing flat to 3.5bp richer with the long end of the curve leading the bid, resulting in bull flattening.
• The richening in Tsys has held in the Asian afternoon after the initial cheapening impulse gave way. Note that the early move cheaper saw 2- through 7-Year yields look through their Friday peaks on adjustments to Friday’s U.S. PPI print (TU-TY futures looked through their respective Friday bases), before the retrace from worst levels saw a move to firmest levels of the session.
• There hasn’t been much in the way of a headline driver, leaving regional participants to digest Friday/weekend news flow, and eye cross-market moves.
• Cross-asset, e-minis are little changed to a touch lower, while the major Asia-Pac equity indices are softer on the day, but operate off worst levels.
• U.S. Treasury Secretary Yellen told CBS that whilst there is a risk of recession it isn't something that will necessarily bring inflation down. She also noted that she thinks by year end 2023 we’ll see “much lower inflation.”
• Tuesday's Nov CPI print is moving into view and presents the final key input ahead of the Fed monetary policy decision, due Wednesday.