Core FI Lose Ground Amid Bounce In U.S. E-Minis, U.S. Tsy Curve Flattens

Light selling pressure hit core FI at the start to the week, in spite of bubbling geopolitical tensions over Russia's military build-up near the Ukrainian border. Participants eyed Wednesday's monetary policy decision from the Fed, which should shed some more light on the policy outlook. U.S. e-mini futures caught a bid, which coincided with weakness in core bond markets.

• T-Notes meandered within a fairly tight range overnight, they last change hands -0-07 at 128-03. Eurodollar futures trade 1.5-4.5 ticks lower through the reds. The Tsy curve bear flattened as cash trading got under way, with yields last seen 1.8-3.1bp higher. Flash Markit PMIs & 2-Year Tsy auction headline the local docket today.
• JGB futures sold off in the morning session to stabilise after the Tokyo lunch break. JBH2 operates at 150.95 at typing, 2 ticks shy of last settlement. Cash JGB yields are little changed across the curve. The space shrugged off domestic PMI data & Covid-19 headline flow, with JGBs happy to move in tandem with peers.
• Cash ACGB yields crept higher and last trade 0.7-2.7bp across the curve. Aussie bond futures slipped in sync with cash ACGBs, with YM last -2.0 & XM -2.0. Bills last sit 1-3 ticks lower through the reds. There was no material follow-through from the release of local PMI figures or today's round of ACGB Sep '26 supply, which drew bid/cover ratio of 4.09x (prev. 6.08x).