Richer, But Off Best Levels

Tsys initially edged higher in Asia-Pac hours but deal off their best levels as we move toward European trade, with TYU2 -0-02 at 118-31+, 0-05+ shy of session highs at typing. Cash Tsys run little changed to 4bp richer across the curve, bull steepening.

• Cross-asset moves came to the fore overnight, negating some of the early Asia bid in Tsys, after regional participants were initially willing to buy into Wednesday’s cheapening.
• Note there has been a distinct lack of notable macro headline flow, with e-minis (as the wider tech sector benefitted from Samsung’s quarterly earnings release) and major crude benchmarks rebounding from below neutral levels.
• Overnight flow was headlined buy a block buyer of FVU2 112.25 puts (+5.0K), which was hedged via a block buy of TUU2 futures (+2.5K).
• A quick reminder that a lack of dovish surprises in the minutes of the latest FOMC decision allowed Tsys to extend to fresh session cheaps into Wednesday’s close, with block sales in TU futures facilitating further curve flattening just ahead of the bell.
• Thursday’s NY docket is headlined by Fedspeak from Governor Waller & St. Louis Fed President Bullard (’22 voter), in addition to the release of the weekly jobless claims and monthly challenger jobs cuts data.