Core FI Lose Altitude Amid Uptick In E-Minis, Despite China COVID Worry

Core FI came under pressure in Asia as an uptick in U.S. e-minis supported market sentiment. That said, uncertain outlook for China's COVID-19 outbreak kept a lid on risk, preventing a deeper bond sell-off.

• T-Notes extended their pullback from Friday's peak (120-08+) before stabilising. TYM2 changes hands -0-06 at 119-30 as we type, while Eurodollars run 1.0-4.0 ticks lower through the reds. Cash Tsy yields sit 2.4-3.5bp higher, curve is tad flatter. Fed's Bostic will discuss the economic outlook later today.
• JGB futures quickly gave away their opening gains. JBM2 trades at 149.80, up 2 ticks versus last settlement. Cash JGB curve has slightly flattened, with the super-long end leading gains. Local headline flow was fairly light, centred around U.S. Pres Biden's ongoing visit to Tokyo.
• Aussie bonds went offered as weekend federal election brought a decisive victory for Labor, with Anthony Albanese swiftly sworn in as new Prime Minister. While votes are still being counted, the risk of a hung parliament has narrowed. YM last -0.5 & XM +1.0, both near session lows. Bills trade unch. to +2 ticks through the reds. Cash ACGB curve twist flattened, with yields last seen +0.8bp to -2.3bp. RBA's Kent said the Reserve Bank is now in QT phase, adding that models estimate the neutral level of cash rate at around 2-3%.