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AUDUSD TECHS

Eyeing Resistance

US TSY FUTURES

BLOCK, 5s/Ultra-Bond Flattener

EURJPY TECHS

Pullback Considered Corrective

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T-Notes -0-06 at 132-06, 0-03 off worst levels after sliding through Thursday's late NY low. A brief bid was seen on headlines pointing to the apparent continued non-payment of a coupon on one of China Evergrande's US$-denominated bonds that was due Thursday (a reminder there is a 30-day grace period on the coupon payment before a default would be triggered), before the cheapening resumed and fresh session lows were seen. Cash Tsys are little changed to 2.0bp cheaper on the day, with 20s leading the weakness.

  • To recap, The Tsy curve was subjected to some aggressive bear steepening on Thursday, with participants focusing on the hawkish developments witnessed come the end of Wednesday's FOMC meeting, unwinding the bulk of the twist flattening that came into play late Wednesday. This left 2s 2.5bp cheaper come the bell, while 30s ran ~13bp cheaper on the day, with all of the major yield benchmarks now above their pre-FOMC levels. A hawkish take when it came to the latest BoE monetary policy decision provided further tailwinds for yields. Equities firmed, adding to the pressure. The space also looked through unexpected upticks in both the initial and continuing jobless claims prints. Broad based selling from a variety of account types was witnessed in the long end, driving the steepening, while flows in the belly were a little more mixed, per several desks.
  • Fedspeak from Powell, Clarida, Bowman, Mester, George & Bostic is due during NY hours.