Core FI Lightly Bid

T-Notes hold within the boundaries of Monday's tight range, hovering a little above Friday's late lows, +0-04+ at 139-05+, with cash yields sitting 0.6-1.4bp richer across the curve, marginal outperformance in the belly. Monday saw U.S. President Trump reiterate his typical bullish view of the U.S. economy. He also revisited the idea of a potential U.S. economic decoupling with China and pointed the finger at the Democrats, suggesting that they do not want to come to a deal re: fiscal aid. On the COVID-19 vaccine front, Trump hinted that the U.S. could approve a product in October. On global trade, Trump pointed to every nation ripping the U.S. off. Elsewhere, Tuesday saw China on Tuesday its global data security initiative that opposes undermining key infrastructure and data theft. Brexit risk and Sino-U.S. tensions continue to bubble in the background. Eurodollar futures -0.5 to +1.0 through the reds.

• JGB futures were better bid, adding 10 ticks vs. settlement, with the long end of the cash curve outperforming, as yields ticked lower across the curve, while swaps lagged in the main, at the margins. There was little to highlight in terms of a driving force behind the bid, although Japanese household spending missed expectations and U.S. Tsy yields were slightly richer across the curve. 5-Year supply was a little soft.
• Aussie bond futures continue to hold a tight range, after a very limited SYCOM session that was hampered by a U.S. holiday. YM unchanged, with XM +1.0 at typing. A story from the AFR has dominated the local news backdrop today. AFR sources have suggested that "banks will be directed by financial regulators to buy up to $240 billion of additional federal and state government debt to normalise emergency bank liquidity, in a regulatory move that will lower government borrowing costs and encourage stimulus spending on infrastructure and other programs." See the earlier bullet for further details and the full release. Elsewhere, Sino-Aussie tensions remain evident, reports note that ABC and the AFR rushed their China correspondents out of the country. This came in the wake of the police demanding interviews with the journalists, which resulted in an "extraordinary diplomatic standoff," per ABC.