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UK 5s/30s drifts towards Friday's low

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T-Notes are relatively flat in early dealing this week, last -0-01+ at 133-11. This comes after the contract finished a little off its post-NFP lows on Friday.

  • To recap, the cash Tsy curve bear steepened on Friday, with the much softer than expected headline NFP print (+235K) ultimately outweighed by the downtick in unemployment (both headline & U6) and a larger than expected uptick in wage growth. Note, there was an initial move richer on the back of the headline NFP miss before the cheapening set in. That left 2s little changed come the bell, while 30s cheapened by 4.5bp on the day. Some suggested that the upcoming week's Tsy supply cycle, alongside expectations for an uptick in IG issuance, also provided some weight ahead of the Labor Day weekend, with activity petering out during the NY afternoon.
  • The Labor Day holiday will result in a curtailed futures session, while cash Tsys will be closed until Tuesday's Asia-Pac open. The broader Asia-Pac docket is limited, so we will likely be in for a round of headline watching during overnight dealing, alongside gauging the regional reaction to Friday's NFP release.