Tight Trade Continues

Tsys have lacked anything in the way of meaningful traction thus far, although a post-data downtick in the ACGB space has seemingly helped apply some light pressure over the last hour or so, after a modest uptick pre-data. The major cash Tsy benchmarks run 0.5-1.5bp cheaper across the curve as a result, sticking to tight ranges. TYU2 is +0-06+ at 120-09+, 0-02 off the base of its 0-06+ range.

• Given the lack of meaningful major news flow and proximity to Friday’s NFP print, we would suggest that today’s Asia-Pac session has been more of a time to reflect for regional participants. This comes after a ~33bp range for 10-Year yields over the last couple of sessions (peak to trough), with Tuesday’s move representing one of the largest intraday net swings observed over the last decade, which included the failure of bulls to meaningfully test the 2.50% yield level (lows of 2.5143% were reached, representing the lowest yield level observed since early April).