Core FI Little Changed In Asia On Thursday

A very modest, early U.S. Tsy bid faded during Asia-Pac trade, T-Notes last -0-01 at 132-05, with the contract sticking within the confines of a 0-04 range. The contract had a brief and very shallow look below Wednesday's low. The major cash Tsy benchmarks sit unchanged to 0.5bp cheaper on the day. U.S. infrastructure matters dominated headline flow overnight. The bipartisan group of Senators meeting on the Hill negotiated a ~$559bn compromise framework re: the matter and will visit the White House to discuss the issue on Thursday. Note that Dem. Party leadership hasn't formally backed the deal and need to give it the once over. On the flow side, TYQ1 129.00 puts were sold on block (-13,125) at 0-01.

• A lukewarm round of 20-Year JGB supply saw the cover ratio tick higher vs. prev. auction, tail narrow a little vs. prev. auction, while the low price matched broader dealer expectations (proxied by the BBG poll). 20-Year cash JGBs have richened by ~1.0bp in the wake of the auction after some modest concession during the morning, while JGB futures haven't shown anything in the way of a tangible reaction. JGB futures print -3 at typing, while the major cash JGB benchmarks run little changed to ~1.0bp richer on the day. There has been a lack of notable domestic news flow on Thursday.
• Australian focus fell on another uptick in COVID cases in NSW (although there were no fresh restrictions imposed today) and further receiving pressure in AUD 1Y/1Y & 2Y/1Y swaps as RBA pricing fades from the recent extremes (likely aided by matters in NSW). YM last +2.0, XM unch. at typing as a result. The 5- to 10-Year zone of the curve lags, despite the presence of RBA purchases in the Nov '28 to Nov '31 area of the curve, with the major benchmarks running unchanged to 1.5bp firmer across the cash ACGB space. EFPs have widened by a little over 1.0bp on the day.