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Core FI Coils In Asia

BONDS

A block lift of TYH2 futures (+2.1K) followed some light screen buying in Asia, allowing the contract to extend to fresh session highs, before backing off. Still, the contract remains in a particularly narrow 0-03+ range, well within the boundaries observed in recent weeks, last +0-01 at 130-08. Cash Tsys sit ~0.5-1.0bp richer across the curve, with the belly leading the bid. There hasn’t been anything in the way of notable macro headline flow observed overnight. Weekly jobless claims data & the latest MNI Chicago PMI print headline the NY docket on Thursday.

  • The overnight weakness witnessed in JGB futures extended in Tokyo trade, with the contract hitting the bell -26 vs. Wednesday’s settlement levels. A technical break below the Nov 30 low has added to bearish momentum after the formation of a double top pattern earlier this month. Cash JGB trade saw 7s lead the way lower, cheapening by ~2bp, while super long swap spreads widened, pointing to a futures driven move which was aided by payside flows in the long end of the swap curve. Local headline flow remained light ahead of the 4-day weekend that will be observed in Japan. A Nikkei poll pointed to a mere 18% of firms looking to raise wages by a degree that would satisfy the wishes of Japanese PM Kishida (+3%).
  • Aussie debt markets coiled during Sydney dealing, with little to drive the space out of tight ranges during the final full session of the calendar year. That left YM -5.5 and XM -9.5 at the bell. EFPs were narrower on the day. Meanwhile, the Bill strip closed 1-5 ticks cheaper through the reds. Local headline flow was light, with PM Morrison confirming the previously touted loosening of COVID restrictions re: isolation protocols.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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