Richer At The Margins In Asia

TYU2 operates just shy of best levels as we head towards London hours, last +0-03+ at 119-15+, -0-03 off the peak of its overnight high, dealing in a 0-10 range on limited volume of ~68K. Cash Tsys print little changed to 1bp richer across the curve.

• Post-NFP spill over and weekend Fedspeak applied pressure to the space in early Asia-Pac dealing, but bears failed to force a break below Friday’s lows in the major futures contracts (only TU experienced an actual test of its Friday trough). That was before geopolitics and a nudge lower in New Zealand inflation expectation provided some modest support for the space.
• In terms of details, the weekend saw Fed Governor Bowman indicate that similar sized rate hikes to the 75bp steps deployed recently should be on the table until inflation meaningfully decreases. Elsewhere, San Francisco Fed President Daly (’24 voter) reiterated her view that the Fed is “far from done yet” when it comes to its fight to bring down inflation, stressing the data dependence of the central bank (perhaps seeming a little more open to a larger than 50bp hike in the process).
• Elsewhere, the weekend saw Chinese trade data for July reveal a wider than expected surplus aided by much firmer than expected exports. Meanwhile, continued tension surrounding Taiwan also generated plenty of headlines, with China announcing its intentions to conduct “regular” drills near the island.
• Looking ahead, NY hours will see the release of the NFIB small business optimism index and unit labour cost data.