Core FI Get Reprieve As Early Risk-On Impulse Fades

Upbeat comments from Chinese Premier Li re: China's growth outlook combined with familiar positives applied some pressure to core FI in early trade, but the risk-on feel gradually moderated. T-Notes had a look through Tuesday lows, but recoiled from 138-04 as e-minis trimmed gains. The contract deals -0-01 at 138-07 as we type. Cash Tsy curve moved off early steeps, yields last seen unch. to +0.3bp. Eurodollar futures trade unch. to +0.5 tick through the reds. There is a U.S. data dump coming up today, with some releases front-loaded ahead of Thursday's Thanksgiving Day. Minutes from the latest FOMC MonPol meeting are also due.

• JGB futures dipped under overnight lows after the re-open, but recovered thereafter and last trades unch. at 152.12. The initial decline coincided with a rally in the Nikkei 225, which hit best levels since 1991, which was weighed against concerns over the local coronavirus situation. Cash JGB yields mostly sit lower, save for the super-long end, with 2s outperforming. Japanese MoF auctioned Y500bn worth of 40-Year JGBs, drawing a cover ratio of 2.67x, with highest yield missing expectations. Japanese news flow revolved around local virus containment measures, with Tokyo metropolitan gov't poised to ask restaurants to close early & urge citizens to limit outing.
• Aussie bonds were pressured from the off amid the aforementioned risk-on impulse, with some pointing to a potential spill-over from NZGBs. 10-Year NZGB yield jumped to a multi-month high after the RBNZ's QE ops saw one big seller. Elsewhere, the RBA offered to buy A$1.0bn worth of semi-gov't bonds, while the AOFM auctioned A$2.0bn worth of ACGB 21 May '32. YM -1.0 & XM -4.5 at typing, with XM off earlier lows. ACGB yield curve runs steeper, with yields sitting 0.3-5.5bp higher. Bills trade 1-2 ticks lower through the reds.