Core FI A Little Lower As Equities Tick Higher In Asia

Friday's uptick on Wall St. has resulted in a move higher in the Nikkei 225 early this week (+1.8%), while e-minis have also ticked higher. This has resulted in some modest pressure for U.S. Tsys & core FI, while the havens (JPY, USD & CHF) find themselves at the bottom of the G10 FX table.

• Headline flow has been limited during Asia-Pac hours, with much of the focus falling on the regional COVID situation and headwinds for global trade.
• T-Notes last print -0-03 at 134-01, sticking to the confines of a 0-06 range and operating on relatively limited volume. Cash Tsys run 0.5 to 1.5bp cheaper across the curve, with the belly leading the way lower ahead of this week's 2-, 5- & 7-Year supply schedule. Asia flow was headlined by a 10K screen seller of the TYU1 135.00 calls. European flash PMI data may set the tone ahead of NY trade. Monday's U.S. docket will see the release of flash PMI data, the latest Chicago Fed national activity index reading and existing home sales data.
• JGB futures last print -10 on the day, which represents a marginal extension of the overnight weakness as an uptick in domestic equities adds some light pressure to the space. The major cash JGB benchmarks run little changed to 1.0bp cheaper on the day with 7s leading the way lower, suggesting the move may be futures driven. Longer dated swap spreads are marginally wider on the day. There has been little in the way of idiosyncratic news flow to note for the space, outside of the previously identified political headlines.
• The Aussie bond space was also biased a touch lower, although the broader ranges once again remain contained. YM -1.5 & XM -1.0 at typing. There is plenty of discussion doing the rounds re: the potential for the first round of positive weekly RBA-purchase adjusted AOFM net supply in some time, given the previously flagged syndication of the new Nov '32 index linked line from the AOFM, which is set to price on Tuesday. Local COVID matters failed to impact the space.