Underpinned In Asia

The impact from the minutes covering the most recent FOMC meeting continued to be felt after the Thanksgiving holiday, with Tsys underpinned during Tokyo dealing.

• That leaves the major cash Tsy benchmarks running 3-6bp richer into London hours, with bull steepening apparent. TYZ2 deals just shy of the peak of its 0-06 range, last +0-11+ (vs. Wednesday’s settlement) at 113-10.
• The impulse from a softer JGB complex in lieu of firmer than expected Tokyo CPI data provided a modest downtick for Tsys at one point, although the pressure was limited.
• Elsewhere, continued focus falls on the COVID situation in China, with localised restrictions in some of the country’s major cities tightening this week, while the new daily COVID case count metric hit a fresh record high today. Speculation/expectation surrounding a potential RRR cut from the PBoC is elevated after Wednesday's State Council meeting guided towards such a move. Many expect the PBoC to act after local market hours on Friday.
• ECB and Riksbank speak provides the highlights of the wider macro docket on Friday.
• A quick reminder that cash Tsys and Tsy futures will be subjected to holiday-shortened trading hours ahead of the weekend.