Stabilising After Late NY Pullback

T-Notes operating around late NY levels, last printing -0-07 at 132-14.

• There was a solid bid for Tsys during most of Thursday's NY session, although momentum waned into the bell, allowing T-Notes to correct from best levels of the day. Cash trade saw outperformance for the 7- to 10-Year sector of the curve, which richened by around 5.5bp come the close. The pullback from intraday lows in yields was seemingly aided by a round of selling in futures, covering maturities from FV all the way out to US & WN.
• 10-Year Tsys had traded as much as ~11bp richer on the day, with focus on U.S.-Russia tensions, as the former imposed fresh sanctions on the latter, while desks pointed to short covering also being in play. Elsewhere, hedging surrounding issuance from U.S. financials in the wake of earnings releases (J.P.Morgan came to market with $13bn of supply) and focus on Japanese foreign bond buying after the turn of the Japanese fiscal year also supported the space.
• Generally strong to solid domestic economic data helped equity markets to fresh record highs, but didn't hinder the rally in Tsys, showing the sort of expectations re: the domestic economy already baked into the bond market, with resilience aided by the Fed's well-documented on hold stance.
• Comments from NY Fed's Logan reiterated the notion that "given the significant increase in reserves and reduction in Treasury bill supply since the start of the year, overnight money market rates have softened. With reserves expected to grow further, we will be monitoring money markets closely and will continue to make adjustments as needed."
• The focal point of Friday's Asia-Pac session will be the release of China's monthly economic activity data & Q1 GDP reading.