Core FI Mixed In Asia As Drivers Diverge

A light bid briefly crept into U.S. Tsys overnight, aided by Chinese regulatory body warnings re: bubbles in domestic property markets and offshore financial markets, while the Hang Seng struggled after Hong Kong's Financial Secretary failed to rule out further stamp duty hikes for equity trading at some point down the line (although he said that no such plans were in the pipeline at present). E-minis have nudged lower as a result. However, the space then pulled back from best levels on cues from the Aussie bond space post-RBA. T-Notes last +0-07 at 133-13, with cash Tsys marginally mixed.

• The cover ratio witnessed in the latest round of 10-Year JGB supply represented the lowest level seen at a 10-Year auction since 2016, which will garner the headlines and detract from the fact that the low price still managed to meet broader dealer exp. (matching the projection from the BBG dealer poll), while the tail only experienced a marginal widening. Futures looked through the auction given the broader breakdown outside of the offer/cover ratio, while there has been nothing in the way of notable underperformance for the 7-10 Year sector of the cash curve post-supply). Futures last +32, with the bid extending through the afternoon after a previously flagged BBG BoJ sources piece (run late Monday Tokyo time) and soft local Q4 capex data provided a bid for the space.
• Aussie bonds traded softer post-RBA as the Bank only expressed slightly more aggressive tones re: support for its 3-Year yield targeting scheme. The language employed wasn't overtly forceful and there was a lack of reference to the ACGB Nov '24 line, which would have provided some disappointment to those who attributed a non-negligible chance to the appearance of rhetoric surrounding the matter. The Bank continued to express some caveated and indeed cautious optimism re: the prospects of a more drawn out economic recovery, while providing nothing in the way of meaningful commentary on the housing market & AUD, although both got a mention. YM -2.0, XM -7.0.