Asia-Pac Core FI Activity Limited By Japanese Holiday

T-Notes have stuck to a narrow 0-04 range in Asia-Pac hours, last dealing -0-01 at 134-02+. A quick reminder that cash Tsys are closed until London hours owing to a Japanese holiday (the same will hold true on Friday). The Japanese holiday has also limited broader volume, with ~45K T-Notes changing hands thus far. There hasn't been much in the way of notable headline flow, although U.S. President Biden flagged the potential for COVID vaccinations for children under 12 in the coming weeks/months. Elsewhere, the Washington Post has suggested that White House officials "are debating whether they should urge vaccinated Americans to wear masks in more settings as the delta variant causes spikes in coronavirus infections across the country." We also saw Biden reaffirm his views on inflation & the labour market. The latest ECB decision and press conference will provide some interest early in the NY session (given Lagarde's recent comments on forward guidance). Domestic focus will fall on the weekly jobless claims data, some of the regional Fed activity indices & 10-Year TIPS supply.

• The local COVID situation continues to underpin the ACGB space during Sydney hours, allowing futures to work away from their overnight lows. We saw a marginal uptick in Victoria's daily case count (up to 26 from 22), with the state's health body noting that "the 26 new locally-acquired are all linked to the current outbreaks. 24 of the 26 cases were in quarantine throughout their entire infectious period." Elsewhere, the NSW daily case count being pressed above 120, with less encouraging isolation statistics than Victoria. YM and XM both comfortably off of overnight lows, with YM -3.0 and XM -3,5 The latest ABS payrolls data revealed a 1.0% fall in the fortnight to July 3, with the ABS highlighting that "the latest fortnight of data overlapped with increased COVID-19 restrictions in most states & territories, including lockdowns in 4/8 capital cities. It also coincided with school holidays in most states & territories." The deeper/wider spread lockdowns are set to result in further dips in this metric in the coming weeks. A$700mn of ACGB 4.25% 21 April 2026 supply, the release of the AOFM's weekly issuance slate and flash PMI data are set to headline the local docket on Friday.