An Impending Blue Wave?

Increased chances of a 'Blue Wave' scenario in U.S. Congress drove price action overnight, with the U.S. Tsy curve bear steepening as a result of growing expectations re: deeper fiscal stimulus, with U.S. 10-Year yields threatening to break above the 1.00% psychological level. T-Notes last -0-12+ at 137-14+, which represents lows of the day. While the Georgia Senate run-offs are still officially deemed too close to call by most, the composition of the votes yet to be counted has resulted in a couple of early calls for Democrat Warnock in one of the races, while the Cook Report has called victory for both Democratic Party candidates.

• JGB futures were also softer, last -8, with a bland 10-Year JGB auction doing little to add support. Cash JGBs deal up to 1.0bp cheaper across the curve at typing. Local focus continues to fall on the impending declaration of a state of emergency surrounding the COVID-19 situation, with expectations for an announcement to be made at some point on Thursday.
• Elsewhere, Aussie bonds traded in sympathy with Tsys, steepening, with -1.5 & XM -9.0 against a limited backdrop of local catalysts.