Aussie Bonds Firm, U.S. Tsys Active, Even With Japan Off

T-Notes corrected from worst levels of the Asia-Pac session after an initial flurry surrounding the U.S. fiscal dynamic and a breach of last week's lows (as well as a brief break below a level coinciding with the largest OI in TYH1 options) generated some pressure, with the ongoing political wrangling surrounding Trump impeachment matters, broader COVID-19 spread/mutation fears and simmering Sino-U.S. tensions (as well as softer e-minis) helping the contract back from early lows. The contract last trades at unchanged levels, of 136-21, 0-06+ off intraday lows. Market conditions were a little thinner than usual owing to a Japanese holiday, which means that cash Tsys won't be open until London hours.

• The RBA's scheduled resumption of ACGB purchases (which met broader expectations in terms of size) and the bounce from lows in U.S.Tsys/light pressure on e-minis has supported the Aussie bond space, with YM +0.5 and XM +1.5 at typing. Participants looked through the latest round of local final retail sales data. Cash trade sees the ACGB curve sit flatter with swap spreads tightening a little across most of the curve.