Core FI Firms In Asia, Event Risk Eyed

T-Notes stuck to a narrow 0-03+ range overnight, last dealing +0-01 at 132-25+. Cash Tsys trade unchanged to 1.5bp richer across the curve, with bull flattening in play, as regional players reacted to Wednesday's bid and looked through any positives surrounding a phone call between the U.S. and Chinese ministers of commerce. Preliminary open interest data pointed to short covering in TU, TY, UXY & US futures on Wednesday, which was touted at the time. A 3,665 lot block buy of TYU1 futures helped the broader bid during Asia-Pac hours. Participants may be happy to sit on the sidelines ahead of risk events scheduled during Thursday's European & U.S. sessions (the ECB monetary policy decision, U.S. CPI print & 30-Year Tsy supply).

• Cash JGBs firmed with the 7- to 10-Year sector leading the way, richening by ~2.0bp as the cash space played catch up to the U.S. Tsy-driven jump in futures during overnight trade. JBM1 +17, incrementally adding to the overnight rally, after an early, limited dip. Super-long dated swap spreads tightened by 0.5-1.0bp. A solid enough liquidity enhancement auction was seen, with the cover ratio nudging higher and the difference between the high and average spreads only ever so slightly wider but moving deeper into negative territory when compared to the previous auction.
• The Aussie bond curve has flattened further in Sydney trade, with spill over from Wednesday's U.S. Tsy move evident. YM +1.8 & XM +8.0 at typing. Roll flow continues to dominate matters, with a bias to selling still evident in both YM & XM rolls.