Core FI Little Changed In Asia

T-Notes pared their modest late NY/early Asia losses, last -0-00+ at 134-21. Cash Tsys have seen some bull flattening with the shorter end of the curve little changed, while the longer end has firmed by 1.0-1.5bp. There hasn't been much in the way of news flow to drive the move, with a downtick in e-minis & high beta FX seemingly lending support. In terms of $ supply, Indonesia outlined a tap of their '51 & '71 $ bonds, and a new 10-Year $ bond. The taps and the 10-Year supply will all be of benchmark size, with the potential for pricing in today's NY session (per BBG sources). 20-Year Tsy supply and fiscal matters on the Hill are set to dominate during NY hours on Wednesday.

• Shorter dated JGBs have richened, 10-Year JGBs have failed to break below 0.01% thus far, while some modest cheapening witnessed in the long end of the curve (~1.0bp) has resulted in some twist steepening. JGB futures print 2 ticks below yesterday's settlement level, unwinding the late overnight bid that was witnessed (which seemed a bit out of line vs. the likes of U.S. Tsys). Comments from BoJ Deputy Governor Amamiya failed to introduce any new areas of interest, while the release of the stale minutes from the BoJ's June meeting was never going to be a major market mover. The latest round of BoJ Rinban operations revealed the following offer to cover ratios: 1- to 3-Year: 2.38x (prev. 2.83x), 3- to 5-Year: 2.63x (prev. 2.69x), 5- to 10-Year: 3.07x (prev. 1.82x), JGBis: 3.19x (prev. 5.50x). A reminder that Japanese markets will be closed on Thursday & Friday as the country observes a public holiday.
• The previously flagged and heavily discussed questions surrounding the economic impact of the Australian COVID lockdowns (NSW & Victoria saw an uptick in their new case counts today) & subsequent impact on RBA policy has provided some underlying support for the Aussie bond space, leaving YM & XM +0.5. The cash ACGB has twist steepened on the day, with the long end running ~2.5bp cheaper, albeit off of cheapest levels. The latest round of ACGB Dec '30 supply saw the weighted average yield print 0.32bp through prevailing mids at the time of supply (per Yieldbroker). The cover ratio firmed vs. the prev. auction of the line, even when you account for the decrease in the amount on offer, with the well-defined supportive factors re: ACGB demand outweighing some valuation headwinds.