Core FI Looks Through Biden-Xi Call, While Holidays Sap Liquidity

T-Notes remain stuck in the 0-02 range established early in Asia-Pac hours, last +0-01 at 136-30+, looking through the communique surrounding the Biden-Xi phone call, with no smoking guns revealed. Ahead of the call a senior U.S. official told RTRS that "President Joe Biden's administration will look at adding "new targeted restrictions" on certain sensitive technology exports to China in cooperation with allies." Flow remained sub-par owing to the earlier flagged holidays evident across the Asia-Pac region, with cash Tsys closed until London hours on the back of a Japanese holiday. T-Notes have seen ~55K lots trade on the day.

• Aussie bond futures ticked along in a narrow range during Sydney hours, with no reaction to the communique surrounding the phone call between the U.S. & Chinese Presidents. YM -0.5, XM +3.0 last, as the curve flattens, with swaps wider vs. ACGBs across most of the curve. On the central bank front a BBG interview with RBA board member Harper saw focus fall on the remaining excess capacity in the Australian economy, while he played down the risk of asset bubbles. On QE, Harper noted that the pace of the economic recovery, in both local and global terms, in addition to actions by other central banks are the main factors that will determine whether the Bank's bond buying scheme is extended again. Elsewhere, the space looked through comments made by Australian Treasury Secretary Kennedy (who also sits on the RBA board), as he noted that the country's economic recovery is probably "locked in" and the nation should shift to a "growth mindset."