TYU2 operates around late NY levels, last dealing +0-00+ at 121-05, with e-minis a touch softer early on. It would seem that the latter is softening on the back of weaker than expected official Chinese manufacturing PMI data released over the weekend (which saw a slump back into contractionary territory), in addition to continued Sino-U.S. tensions surrounding the potential journey to Taiwan by U.S. House Speaker Pelosi (note that Taiwan was not on her initial trip itinerary released over the weekend, while China conducted military drills in the Taiwan Strait as some of the more nationalist Chinese press outlets issued warnings re: any such visit). Elsewhere, Minneapolis Fed President Kashkari (’23 voter) stressed the Fed is a long way from where it needs to be in its fight against inflation, flagging his surprise re: the market’s interpretation of the central bank’s language.
- To recap, the long end of the curve more than unwound its pre-NY weakness on Friday, with the curve twist flattening as the major benchmark yields finished 2bp cheaper to 3bp richer, pivoting around the 3- to 5-Year zone, while 10s proved to be the strongest point on the curve.
- Some stronger than expected national GDP data out of Europe provided pressure during early London dealing (German data was the exception to that particular rule), while firmer than expected CPI data out of Europe also helped the move lower. Marginal beats across the PCE data suite and ECI print helped Tsys tap a fresh session low in early NY dealing before a bit of a base was found, with that move accelerating further on the back of a slower than expected rate of expansion in the latest MNI Chicago PMI print.
- Note that space moved away from best levels into the bell as the month-end vol. ensued. This left the space comfortably off of extremes at the close.
- Caixin manufacturing PMI data out of China headlines the Asia-Pac docket, with the final manufacturing PMI prints out of Europe also due before U.S. hours. The ISM manufacturing survey and final S&P m’fing PMI print provide the highlights of Monday’s NY data docket.