Tight Ranges In Play In Asia, Chinese Equity Weakness Limits Losses

The previously outlined weakness in Chinese equities (based on COVID worry and fines for big tech names), which weighed on broader risk appetite, allowed Tsys to tick away from worst levels of the session, after early Asia-Pac trade saw regional participants undertake some light selling as they reacted to Friday’s post NFP front end-led cheapening. TYU2 last deals +0-02 at 117-22, just off the peak of its very tight 0-04 Asia range, with a lack of fresh headline flow since the Asia re-open and diminished liquidity on the back of a holiday in Singapore hampering activity (TYU2 operates on ~60K lots in volume terms). Cash Tsys run little changed to 1bp cheaper across the curve at typing.

• Note that the US contract was the only major Tsy futures contract to show through its Friday low in overnight dealing (albeit only marginally, with the move short-lived).
• Monday’s NY docket includes another appearance from NY Fed President Williams (with the address set to focus on the LIBOR transition) and 3-Year Tsy supply. The European gas situation will also be eyed, with the annual maintenance period of the Nord Stream pipeline getting underway today.