Core FI Ebb Lower Amid Hopes For Progress On U.S. Stimulus

Comments from House Speaker Pelosi & Tsy Sec Mnuchin signalled willingness to return to the negotiating table, inspiring hopes for progress towards another stimulus package in the U.S. Cautious enthusiasm about fiscal matters underpinned better risk appetite in the Asia-Pac session, applying pressure to core FI.

• T-Notes trade -0-02+ at 139-16 at typing, after a brief recovery attempt proved shallow. The contract moved within a fairly tight 0-03 range, as regional news flow offered little of note. Cash Tsy yields trade unch. to +1.0bp across a marginally steeper curve. Eurodollars last seen unch. to -0.5 tick through the reds. Flash durable goods orders & comments from Fed's Williams and George headline in the U.S. today, with no Tsy issuance scheduled.
• JGB futures lost altitude and last trade at 152.12, 3 ticks shy of settlement and through yesterday's low. Cash JGB curve has twist steepened, with 40s underperforming after a weak auction yesterday.
• In Australia, YM -0.5 & XM -0.5 as we type, both slightly off lows. Cash ACGB yields sit marginally above neutral levels, save for 30s. Bills trade -2 to +1 tick through the reds. The space felt some brief, mild pressure as the WSJ published a piece noting that the RBA will not cut interest rates in Oct. The WSJ article came after similar opinions circulated by the Herald Sun & AFR, as well as a comment from CBA analysts. Elsewhere, Australian trade surplus probably shrank a tad in August, according to preliminary data from the ABS, with both imports and exports registering declines. The AOFM's weekly issuance schedule was also eyed.