Asia To Assess Monday’s Cheapening & Local Central Bank Matters

TYH3 operates around late NY levels, flat on the day at 114-04+.

• Tsys finished just off of worst levels on Monday, as the major cash benchmarks closed 8-10bp cheaper, with 10s leading the weakness.
• The well-documented BoJ rumours applied pressure during Asia-Pac hours on Monday, before a combination of hawkish ECB speak, UK fiscal & BoE Gilt sale matters weighed on core European FI markets, spilling over into Tsys.
• The move then extended during the NY session, with a TY block sale (-10,120) adding to the pressure.
• Note that wider volumes were limited, as participants eyed the Christmas holiday period.
• Today’s Asia-Pac docket consists of the latest BoJ monetary policy decision (no change expected), the release of the minutes covering the latest RBA monetary policy decision and this month’s LPR fixing from the PBoC. ECB speak will then headline in London hours, while building permits and housing starts data provides the most notable round of economic data during the NY session.