Core FI Back From Friday Highs

Asia-Pac hours saw core fixed income markets pressured by the trifecta of higher oil prices, a wider than expected Chinese trade surplus (firmer than exp. exports & softer than exp. imports), as well as the passage of the Build Back Better and infrastructure spending plans in the U.S. on Friday.

• A round of TYZ1 lifts (4K block and ~3K subsequently on screen) helped the Tsy space find a bit of a base mid-way through the Asia-Pac session. TYZ1 runs -0-04+ at 131-22 at typing, off lows and within the confines of 0-06+ overnight range, while the major cash Tsy benchmarks sit 0.5-1.5bp cheaper across the curve. A raft of Fedspeak, headlined by Chair Powell & Vice Chair Clarida, in addition to 3-Year note supply from the Tsy, headline the local docket on Monday.
• JGB futures sit at unchanged levels after giving back their overnight gains on the aforementioned dynamics, while the domestic fiscal burden continues to dominate headline flow. Cash JGBs run 0.5bp richer to 1.0bp cheaper across the curve, with 20s providing the weak point on the day. 30-Year JGB supply headlines the local docket on Tuesday.
• ACGBs lacked any meaningful local catalysts, leaving the space to track broader gyrations, with YM +7.0 & XM +6.0 come the bell. The weekend saw news that Australia hit its target of having 80% of 16+-Year olds fully vaccinated against COVID, with PM Morrison also noting that the border will open to foreign workers before Christmas. Issuance provided some points of interest; TCV launched a syndicated benchmark sized tap of its Nov '34 line, which is set to price on Tuesday, while Westpac mandated for a 5-tranche round of US$-denominated issuance.