Core FI Calm After Initial Flurries

A lack of meaningful concrete developments re: some of the early risk positive factors, namely the extension of Brexit discussions and the U.S. fiscal impasse, ultimately limited trading after the initial flurry of flow surrounding the respective market re-opens. While the initial deployment of Pfizer's COVID-19 vaccine in the U.S. is a positive, that was at least partially negated by the aforementioned sources of uncertainty and short term COVID-19 pain, in addition to pockets of geopolitical unrest. That left T-Notes -0-04 at 137-31, a little off lows and within a 0-03 range after the small gap lower at the open, while cash Tsys have seen some light bear steepening, with 30s 1.4bp cheaper on the day.

• JGB futures have coiled, last +7, while the long end of the cash JGB curve lagged a little in early trade this week, given the slight underperformance in longer dated U.S. Tsys during Friday's session and generally risk-positive start to today's session (although the broad risk-positive move has faded from extremes and wasn't particularly fierce). The latest BoJ Tankan survey saw all of the major survey metrics edge closer to the neutral 0 level, although they all remained in negative territory. Meanwhile, the large firms' CapEx estimates missed expectations, surprisingly printing in negative territory. Participants now look to a government meeting re: COVID-19, which will be held after hours today.
• Aussie bonds saw a brief blip higher to new highs of the day for XM on the back of the previously flagged Westpac view re: RBA QE extension, although the move has faded, with YM last +0.4 & XM +2.9 based on the H1 contracts. Outside of that move, residual roll volume continues to dominate, given the lack of headline news flow, after swings in the broader risk tone dictated price action early on.