Core FI Biased A Touch Lower Overnight

Core fixed income markets saw some modest cheapening in Asia-Pac hours, with a phone call between U.S. Tsy Sec Yellen & Chinese Vice Premier Liu He pointing to loose agreements re: the need for a certain degree of coordination between Sino & U.S. economic and political policy albeit with the U.S. airing some grievances) resulting in very modest risk-on price action. Elsewhere, Facebook's $50bn boost to its share buyback scheme supported the e-mini space in the early rounds of dealing.

• TYZ1 is -0-02 at 130-16 as a result, while cash Tsys run up to ~1.5bp cheaper across the curve, with the belly leading the downtick. Tuesday's NY dealing will be headlined by 2-Year Tsy supply. Elsewhere, new home sales data, the latest Richmond Fed m'fing survey and conference board consumer confidence print will hit. We also note that the fiscal back and forth within the Democratic Party continues, although progress in the matter has been touted by several quarters.
• The JGB curve saw some light twist flattening during the Tokyo morning, while futures shed 8 ticks on the modest risk positive price action witnessed elsewhere. Local news flow remains relatively light, headlined by PM Kishida noting that he plans to draw up his economic policy proposals in November (there is the small issue of the upcoming lower house elections to contend with, which will be held over the coming weekend). Kishida's comments pointed to focus on social security, digital garden cities and public sector pay.
• Sydney trade sees YM -4.0 & XM -3.0, with pressure building in the space ahead of the bell and the modest overnight gains now completely unwound. The move has gathered steam as futures move through their respective overnight lows. Perhaps a degree of position squaring ahead of tomorrow's local Q3 CPI print is exacerbating the move.