Core FI Firms On Several Risk Negative Matters

Core FI nudged a little higher overnight with the U.S. fiscal impasse, suggestions that the U.S.-Iranian talks may not be quite as advanced as some have suggested (per BBG sources), news that a Syrian missile fell near an Israeli nuclear site (triggering a retaliatory attack) & the COVID situation in India all noted in Asia-Pac hours.

• Bulls were not able to overcome technical resistance in T-Notes, in the form of the 50-day EMA, with that contract now 0-01+ off highs, printing +0-06 at 132-23. Meanwhile, cash trade saw the recent low in 10-Year yields hold firm, although that benchmark continues to trade below its 50-DMA (after breaching that metric for the first time since November). Regional participants have seemingly used the uptick to initiate downside plays/hedges, with 20.0K TYM1 131.50/130.50 put spreads lifted on block (after 20.0K TYM1 131.00/130.00 put spreads were lifted on block during Asia-Pac trade earlier this week), and 5.0K FVM1 122.25 puts lifted on screen, although the former may have represented a position rejig.
• JGB futures have latched onto the broader bid in the core FI space, with a continued sprinkling of worry re: the local COVID situation still proving to be a supportive factor. Futures +4 last, back from highs, but more than reversing the modest overnight losses, with the 7-Year zone of the cash curve outperforming, richening by 1.5bp on the day as of typing. 20+-Year swap spreads are tighter once again.
• The bid in U.S. Tsys dragged the Aussie bond space flatter (which may be aided by the A$4.4bn+ round of coupon payments in the ACGB space, paid yesterday), leaving YM -0.5 and XM +3.5. Little to note on the local front, with the RBA delivering the scheduled round of ACGB purchases.