Core FI A Touch Better Bid In Asia

U.S. Tsys drew support from a modest downtick in e-minis during Asia-Pac hours (after the S&P 500 lodged a fresh record high on Monday), with geopolitical tension centring on the Middle East, broader COVID worry and regulatory matters in China all presenting relatively familiar topics of headline flow. That allowed T-Notes to unwind their post settlement losses lodged late in the NY day, with that contract last dealing unchanged at 134-10+, while cash Tsys sit little changed to ~1.5bp richer on the day into European hours.

• JGB futures unwound their overnight losses to last trade +2, with Japanese COVID chief Nishimura outlining the touted longer and wider state of emergency that the government is looking to implement. Cash JGBs trade little changed to ~1.5bp richer on the day.
• Aussie bond futures also received some incremental support from the previously outlined risk-negative factors, although the space traded in a fairly limited fashion, YM +1.0, XM +0.5 last. The uncertainty created by the latest local outbreak of COVID seemed to be much more of an issue in the RBA meeting minutes (released today) than it was in text and communique that immediately followed the August decision, with the Bank ultimately stressing that "the bond purchase program will continue to be reviewed in light of economic conditions and the health situation, and their implications for the expected progress towards full employment and the inflation target. The Board would be prepared to act in response to further bad news on the health front should that lead to a more significant setback for the economic recovery." Still, the minutes underscored the Bank's thought process that fiscal support would be timelier, although the optionality that the RBA has clearly defined will become more of a discussion point the longer the lockdowns in Australia last. Elsewhere, the detection of a COVID case in the Auckland community supported the NZ rates space and impacted pricing re: RBNZ tightening, which may have provided some incremental support for ACGBs.