ACGB Matters Dominate

The first Asia-Pac session of the week was a little lacking in terms of meaningful macro headline news. A downtick for e-minis (after Friday saw a fresh all-time high for the S&P 500), coupled with some caution in Australia re: COVID was enough to generate some modest support for T-Notes, with that contract last dealing +0-01+ at 133-15, within the confines of a 0-04+ range. Cash Tsys saw some very modest twist flattening. Participants now look to Monday's "double supply" (in the form of 3- and 10-Year Notes) and an address from Minneapolis Fed President Kashkari.

• JGB futures trade 2 ticks lower on the day at typing, with the contract paring modest overnight losses, likely on the back of the light bid in broader core FI markets during regional trade (U.S. Tsys/ACGBs), given the lack of local news flow. The major cash JGB benchmarks mostly deal a little firmer on the day, but within the -/+1.0bp boundaries when compared to Friday's closing levels. Local PPI data (for June) revealed a slightly higher than expected uptick in both M/M & Y/Y terms, although both prints were a touch lower than the readings witnessed in May (which saw upward revisions). Core machine tool orders data provided healthy beats in both M/M & Y/Y terms. Note that 20s showed no sign of concession ahead of tomorrow's 20-Year JGB supply.
• The longer end of the curve has played catch up during Sydney trade, seemingly on the confirmation of 112 new local COVID cases in NSW (after such a number was touted by local reporters ahead of the release). Speculation re: deeper fiscal support packages and harder/longer lockdowns in NSW continues to intensify, which has underpinned the space today. YM +3.5, XM +4.0, with the long end now leading the way in cash ACGB trade, richening by a little over 5.5bp on the day. The monthly NAB business survey headlines the local docket on Tuesday.