Core FI Garner Some Strength, Steepening Hits U.S. Tsy & JGB Yield Curves

Fresh headlines failed to offer much of real note, leaving participants to reflect on the most recent updates on the global Omicron situation. Resultant defensive feel provided some support to core bond markets in Asia.

• T-Notes inched higher after the re-open but stabilised thereafter. The contract changes hands +0-03 at 130-22+ as we type, after topping out at 130-23+ earlier in the Tokyo session. U.S. Tsy curve bull steepened, with yields last seen 0.7-1.5bp lower. Eurodollar futures run 0.25-2.0 ticks higher through the reds. Wholesale inventories headline the thin domestic data docket today. On the issuance front, today's sale of 7-Year Tsys will mark the final U.S. bond offering this week.
• JGB futures wavered in a relatively tight range and last operate at 151.87, 2 ticks above previous settlement and slightly below their session high of 151.90. Cash JGB yield curve bull steepened, albeit 5s outperformed (note that this came after Wednesday's strong offering of U.S. 5-Year Tsys). The local headline flow was rather uninspiring.
• Aussie bonds climbed as Antipodean markets re-opened after a four-day Christmas break. Futures were bid, with YM last +3.5 & XM +3.5, both within touching distance from respective session highs. Cash ACGBs also firmed; yields last operate 2.5-3.8bp lower across a flatter curve. Bills trade unch. to +6 ticks through the reds. The space may have drawn some support from domestic Covid-19 developments, as NSW recorded a record daily case count and PM Morrison called a National Cabinet meeting for Thursday to discuss tweaking the country's re-opening strategy.