Activity Peaks At Cash Tsy Re-open As Asia Reacts To Clarida

Most of the Asia-Pac session's meaningful price action came around the cash Tsy re-open, and looked to be a result of the Asia-Pac region's reaction to Wednesday's comments from Fed Vice Chair Clarida on tapering/rate hikes and, to a lesser degree, the strong ISM services print out of the U.S. The contract last prints -0-04 at 134-22+, 0-01 off worst levels, on volume of ~80K. Cash Tsys sit 0.5-1.5bp cheaper as 5s lead the weakness. San Francisco Fed President Daly ('21 voter) reiterated her view re: the potential for tapering later this year/in early '22. A 7.0K screen seller of EDU3 provided the highlight on the flow side. Elsewhere, a 5.0K screen buyer of the FVU1 123.75 puts was seen. Pre-NY focus will fall on the latest BoE decision, where the vote split surrounding the Bank's asset purchase facility and any comments on the sequencing review re: normalisation will be eyed. NY hours will be headlined by comments from Fed Governor Waller and Minneapolis Fed President Kashkari ('23 voter). We will also get the latest round of weekly jobless claims data.

• The broader weakness in global core FI markets has weighed on JGB futures during Tokyo trade, with the contract last printing 10 ticks lower on the day. The cash curve has seen some twist steepening, with 10s back to the 0.01% marker in yield terms. The shorter end of the cash curve trades ~1.5bp richer, while 40s run ~1.0bp cheaper. The combination of the global core FI impulse, a softer JPY and a modest uptick for domestic equities has negated any risk-off flows surrounding the longer end of the curve. There has been a lack of notable domestic news flow, outside of confirmation of the previously outlined story re: the expansion of the quasi state of emergency to cover a further 8 prefectures. Wage data headlines the local docket on Friday.