Core FI Better Bid Into European Hours

It has been a quiet Asia-Pac session in terms of broader news flow. We haven't seen much to drive the recent bid in the U.S. Tsy space, but e-minis are off best levels, with Bitcoin trading back below $30,000 for the first time since late June. We are always cautious when pointing to direct correlations with cryptocurrencies, but that could be at least a partial driver here. Also, the bid in the ACGB space could be providing another (modest) leg of support. T-Notes last -0-02 at 134-20, after tagging best levels of 134-21 in recent dealing, once again operating on healthy volume of ~125K. The belly of the cash curve has seen some modest outperformance, with the major benchmarks across the Tsy curve running little changed to 1.0bp richer into European hours.

• JGB futures have stuck to the upper half of the overnight range for most of the Tokyo session, and last deal +15. The major cash JGB benchmarks have generally richened by 0.5-1.0bp, given the dynamic in core global FI markets & JGB futures overnight, with 10s moving back to their recent 0.01% low. Still, technical resistance for futures in the form of the July 9 high (152.59) remains untouched. The latest liquidity enhancement auction covering off-the-run 5- to 15.5-Year JGBs saw a soft cover ratio, although this didn't have much, if any, impact.
• The Aussie bond space has drawn a modest bid from Westpac chief economist Bill Evans flagging the potential for the RBA to temporarily lift its bond purchases to A$6bn/week at its September meeting (and thus reverse its decision to taper to A$4bn/week), please see the earlier bullet for more details on Evans' comments. YM +5.0, XM +8.0. The 10- to 12-Year zone of the cash ACGB curve has outperformed.