Core FI A Touch Lower In Asia

Weakness in T-Notes allowed the 7- to 10-Year zone of the cash Tsy curve to underperform overnight, cheapening by ~3.5bp on the day, with T-Notes last printing -0-03+ at 131-02+. The move was aided by JPY weakness (much of the JPY movement surrounded the end of FY flows in Japan around the Tokyo fix), and firmer than expected official PMI readings out of China. Elsewhere, participants continue to look ahead to today's infrastructure related address from U.S. President Biden.

• Some modest pressure crept into the JGB space on the back of the same drivers. Cash trade sees 20+-Year paper a touch cheaper, with the remainder of the curve trading either side of unchanged, while futures sit 6 ticks softer on the day. The BoJ left the size of its 3- to 5- & 10- to 25+-Year JGB purchases at unchanged levels, with little to note on the offer/cover front. As we noted earlier, the BoJ's April Rinban plan is due to hit after hours and this is the first time that we will see the outright purchase amounts given in the Rinban plan (ranges were given in the past). Some have suggested that the BoJ could cut the size of its super-long JGB purchases, while others have suggested that any such move would come too soon after the BoJ's March decision and may risk muddying the message of a need for low yields across the entirety of the curve.
• Aussie bonds generally drifted lower in the wake of the firmer than expected official PMI readings out of China and stronger than expected local building approvals data, with the pressure applied to U.S. Tsys also noted. Futures have corrected from worst levels, although there is little in way of support seen from the previously flagged "modest" month-end extension for local bond market indices. A reminder that today's ACGB Nov '31 supply wasn't the firmest in pricing terms, but was still smoothly absorbed. YM -0.5, XM -2.0. the 10- to 12-Year zone of the curve underperforms in cash ACGB trade.