Tsys A Touch Richer Overnight, Broader Core FI Off Lows

Russia-Ukraine standoff worry applied a very modest bid to U.S. Tsys overnight. Social media circulation of images re: the Russian troop movements flagged on Monday (into an “attack formation”), coupled with some commentary from various U.S. military watchers, seems to have applied very modest pressure to e-minis in recent trade. Still, there didn’t seem to be much new information in the tweets. We also saw the U.S. State Department issue travel warnings/guidance to leave re: the likes of Belarus & Moldova overnight, which applied light pressure to broader sentiment. Still the overall bid was modest, and at least partially tempered by the PBoC’s move to leave the interest rate applied to its MLF operations steady (although this was consensus, 11 of the 27 surveyed by BBG looked for some form of cut). TYH2 +0-05+ at 126-05 as a result (sticking within a 0-05+ range in Asia), with cash Tsys running 1-2bp richer. On the flow side, it was a TU block buyer (+5K) that headlined in Asia. NY hours will see the release of U.S. PPI data and the Empire Manufacturing print.

• JGB futures moved away from fresh cycle lows (lodged in the most recent overnight session) given the negative tinge when it came to broader sentiment. That left the contract -1 at the Tokyo close, after it regained the 150.00 handle. Cash JGBS were 1bp cheaper to 1bp richer, with the 7- to 10-Year zone being the only area of the curve that managed to richen on the day, likely linked to the aforementioned uptick in futures. Note that the latest round of Japanese GDP data provided modest downside surprises at a headline level. Elsewhere, BoJ Governor Kuroda reaffirmed the Bank’s willingness to maintain its current easing stance.
• Aussie bond futures initially showed lower in early Sydney dealing, but the broader, modest risk aversion allowed the space to edge away from Sydney lows. That left YM & XM -5.0 come settlement, comfortably off of overnight lows that came on the back of hope that a diplomatic situation can be reached when it comes to the Ukraine standoff.