Bonds Firm Amid Defensive Feel, Long End Of U.S. Tsy Curve Outperforms

Lingering defensive feel has generated a tailwind for core FI in early Asia-Pac trade. Fresh headline flow has been relatively thin, with regional players absorbing overnight impetus and preparing for the impending start of U.S. earnings season.

• Cash U.S. Tsy curve has flattened a tad, with the longer end outperforming ahead of today's 30-Year auction, with Tuesday's strong 10-Year offering leaving participants optimistic. T-Notes have crept higher and last trade +0-01+ at 131-06, with bulls keeping an eye on yesterday's high of 131-07+. Eurodollar futures run unch. to +1.0 tick through the reds. The local economic docket is quite eventful today. On the data front, U.S. CPI will steal the limelight. Separately, the Fed will release the minutes from their Sep MonPol meeting, while policymaker Brainard will speak at a Fed Listens event in Oklahoma.
• JGB futures reopened on a firmer footing, last trade at 151.31, 6 ticks above previous settlement. Cash JGB yields sit a touch lower across the curve, with the super-long end outperforming at the margin. The annual growth in Japan's core machine orders was faster than forecast, but came alongside an unexpected monthly contraction. The BoJ will conduct their 1-3 & 5-10 Year Rinban operations within half an hour or so.
• Aussie bond futures have edged higher, YM last trades +1.5 & XM +3.5. Cash ACGB curve has bull flattened, yields sit 0.3-4.3bp lower. Bills last seen -1 to +2 ticks through the reds. The AOFM auctioned A$1.0bn of ACGB May '32, bid/cover ratio ticked higher to 5.90x from 5.24x seen at the previous offering. There was little apparent reaction to comments from Australian Treasurer Frydenberg, who suggested that Q3 GDP contraction may be deeper than forecast before, but anticipated a strong rebound thereafter and flagged prompt adjustments on the part of Aussie exporters in response to various measures taken by China.