A Deal On The Horizon?

The apparent narrowing of the fiscal divide on the Hill has provided some light support to e-minis in a holiday thinned Asia-Pac session, which provided light pressure to T-Notes, last -0-02+ at 139-14+. Still, it is worth remembering that Senate Majority Leader McConnell played down any prospect of the Democrats' proposal being passed through the Senate on Wednesday. The curve is a touch steeper on the day, with cash Tsys 0.2-1.1bp cheaper vs. Wednesday's closing levels. Eurodollar futures sit unchanged to -0.5 through the reds.

• JGBS looked through a solid 10-Year JGB auction (see earlier bullet for further details), with futures last -6 on the day, while the cash space sits unchanged to marginally cheaper. LDP Secretary General Nikai downplayed the prospect of Japanese PM Suga calling a snap election, while he also noted that he would support fresh fiscal stimulus, if required, in an interview with the Nikkei. We also saw BoJ Tankan survey figures mostly miss expectations, but improve on Q2, just, while the CapEx intentions metric was a touch firmer than expected, although not as firm as in Q2. Elsewhere, last week saw foreign investors run up the largest week of net sales of Japanese bonds since the turn of the FY.
• Aussie bonds were steeper on the day, in sympathy with U.S. Tsys, with participants looking through lower tier local data to next week's domestic risk events. YM -2.5, XM -4.0. Bills 1-2 ticks lower through the reds.