Richer On Friday, Cash Markets Closed Today

TYH3 deals at 112-00, unchanged from Fridays settlement level. An initial, modest downtick from closing levels was seen at the re-open, as Asia-Pac participants looked to lean against Friday's bid, although heightened geopolitical tensions (centred on Sino-U.S. relations and the latest round of North Korean missile launches) likely limited the follow through.

• To recap, cash Tsys finished 2-5bp richer across the major benchmarks on Friday, with intermediates outperforming.
• Cross-market flows dominated in Friday's European session, pressure on EGBs weighed after ECB-speak from Schnabel who said the market may be underestimating inflation pressures.
• A dovish tilt from ECB's Villeroy facilitated a rally off session lows, he noted potential for slower hikes after March.
• Tsys extended gains as Richmond Fed President Barkin said he favored 25bp hikes going forward to give the bank flexibility as it looks to lower inflation.
• Short-covering ahead of the Presidents Day long weekend also aided the bid, per several desks.
• LPR fixings from China headline the Asia-Pac calendar on Monday. Further out, the docket is thin. U.S. cash markets are closed for the observance of the Presidents Day holiday, wider liquidity will be impacted.