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Some Light Selling Early On


TYM2 moves lower at the re-open, to last deal -0-05 at 124-15+, perhaps aided by headlines such as “Russia and Ukraine edge towards agreement on key peace points, says Turkey” (FT), even as the conflict rages on. Note that the Russian army has formally called on Ukrainian forces to lay down their arms in the city of Mariupol, promising safe passage out of the city if they do so. They also noted that humanitarian passage out of the city will be open at 07:00 London time on Monday. Elsewhere, the weekend saw Ukrainian President Zelenskiy reaffirm that he remains open to negotiations with his Russian counterpart, although he suggested that the failure of such peace talks would result in a third world war. A quick reminder that cash Tsy markets will not be open until London hours owing to the observance of a Japanese holiday.

  • To recap, hawkish Fedspeak, headlined by Bullard’s explanation for his hawkish dissent at last week’s FOMC, dominated market-related news flow on Friday, with the 7-/10-Year curve finishing in inverted territory, while the 5-/10-Year curve flicked in and out of inversion during NY hours. Bullard, Governor Waller & Richmond Fed President Barkin (’24 voter) all expressed openness to 50bp rate hikes. Even vociferous dove, Minneapolis Fed President Kashkari (’23 voter) flagged an openness to going quicker on rate hikes if required (after pointing out that his view for the required amount of rate hikes in ’22 falls in line with the median dot in the SEP). The continued worry re: the Fed’s ability to engineer a “soft landing” resulted in twist flattening of the curve, with the major benchmarks finishing 2.5bp cheaper to 4.5bp richer, pivoting around the 5-Year area. Although a late NY TU/TY block steepener (+20.0K/-10.75K) caught attention on the flow side.
  • The latest round of LPR fixings out of China headline the regional docket during Asia-Pac hours. Looking ahead, the Chicago Fed National Activity index provides the only economic release of note on Monday, while Fedspeak will come from Chair Powell & Atlanta Fed President Bostic (’24 voter).
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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