Core FI Mixed After Early Pressure In Asia

T-Notes recovered from worst levels of the Asia-Pac session after early trade saw Monday's low breached, with some profit taking on low vol TY downside plays (both on screen and via block) noted. Macro headline flow was generally light, with Fed's Kaplan (a non-voter in '21) pointing to the potential for QE tapering later this year and a sign from Messrs Trump & Pence that the President plans to see out the short remainder of his term headlining overnight. RTRS source reports pointing to the potential for a deeper Chinese crackdown re: the HK political sphere may have provided some light support. T-Notes last -0-03 at 136-10+, while cash Tsys trade little changed across the curve.

• JGB futures firmed in afternoon trading, aided by a moderation in offer to cover ratios in the BoJ's latest round of 3-25 Year Rinban ops, while FinMin Aso noted that the government will maintain its existing budget outlines for now. Early morning trade saw some light pressure on the back of the broader impetus seen in core global FI in recent sessions, with Tokyo returning from an elongated weekend. Futures last +8, with modest twist steepening of the cash curve in play after the aforementioned Rinban ops allowed the shorter end of the curve to unwind its early, modest underperformance.
• Aussie bonds traded in a lacklustre fashion, with little in the way of notable headline flow seen. YM -0.5, XM -3.5, following the broader themes seen in core FI during Asia-Pac hours after the latter printed at the lowest levels seen since the March vol in early Sydney trade.