Core FI Lightly Bid In Asia, Familiar Risks Eyed Into Christmas

All in all there was little to report during Asia-Pac trade, with tight ranges in play for U.S. Tsys. T-Notes stuck to the confines of a 0-03 range, last +0-03 at 137-27+, while cash yields sit within 1.0bp of closing levels across the curve, with very modest richening seen. Continued worry surrounding the COVID-19 situation in the UK and a sense of more being needed re: U.S. fiscal support (despite the passage of the latest fiscal support scheme through Congress) blunted any lingering risk appetite in what proved to be a headline light session.

• There was little to rock the boat for the JGB space, with futures mostly sticking to their overnight range, last +4, while cash trades marginally mixed across the curve. The latest liquidity enhancement auction for off-the-run 15.5-39 Year JGBs came and went without much fanfare, but wasn't particularly strong.
• Several desks that we have spoken to pointed to today's record low fixing for 3-Month BBSW as the supportive factor for the shorter end of the Aussie curve during Sydney dealing, and a possible drive of receiver side flows in the swap space, all of which stems from the RBA's ultra-loose monetary policy setting pumping liquidity into the system (surplus funds lodged on E/S accounts at the RBA have moved towards all-time highs in recent days), with 3-Year ACGB yields registering a fresh all-time low in the process, at 0.091% (per BBG generics). YM +1.5, XM +0.5 as result, with the cash ACGB curve twist steepening and swaps generally narrower.