Ticking Lower

Tsys have seen some very modest cheapening since the turn of the hour, perhaps aided by news that Chinese President Xi & Russian President Putin will be attending the G20 summit in Indonesia, which is due to take place in November. A reminder that there is an expectation that U.S. President Biden will speak with Xi in South East Asia in November, owing to previous press reports and the U.S. confirming that planning for such a meeting is underway.

• In addition, the Kremlin had previously flagged Putin’s desire to attend the November summit, meaning that this headline flow doesn’t come as much of a shock.
• TYU2 operates in a narrow 0-04+ range, last dealing -0-01+ at 118-25+, 0-00+ off lows. Meanwhile, cash Tsys run 0.5-1.5bp cheaper across the curve, with the front end leading the way in a light bear flattening move, which comes after Thursday’s bull steepening.
• Cross-assets moves aren’t definitively risk-off or -on in nature, with e-minis marginally lower, the USD bid and Tsys cheaper.
• Note that some have suggested that Putin’s presence could bolster the Sino-Russian power axis at the meeting, with no firm consensus amongst the remainder of the G20 re: his attendance of the aforementioned summit (although we don’t believe such a view is driving market moves given the leg higher in USD/JPY).
• The limited move in Tsys may be attributable to regional reaction to Thursday’s bull steepening, at least in part, while the move in the broader USD may be exacerbated by the break in the BBDXY index through its Thursday peak.