Core FI Mostly Firmer On UK COVID Worry

The worsening COVID-19 situation in the UK dominated matters in Asia-Pac trade, outweighing fiscal progress in DC, with T-Notes slowly grinding higher through Asia-Pac hours, last +0-06 at 137-30. Cash trade has seen some bull flattening, with 30s running 2.3bp richer at typing.

• JGB futures firmed a little, last printing 5 ticks above Friday's settlement levels, aided by the broader defensive feel to the session. The move took place alongside some twist steepening of the curve, which was likely driven by speculation surrounding and official confirmation of last week's reports pointing to Y600bn worth of additional 40-Year JGB supply in the FY21/22 budget vs. the current FY, although the super-long end has now recovered from cheapest levels. Elsewhere, the BoJ left the size of its 1-10 Year Rinban operations unchanged, with the following offer/cover ratios seen: 1-3 Year: 2.09x (prev. 2.47x), 3-5 Year: 3.21x (prev. 3.29x), 5-10 Year: 3.05x (prev. 3.26x).
• Aussie bonds clung to broader defensive dynamic, with YM +1.5 & XM +2.5, after the latter unwound its overnight session losses early on, drawing an extra layer of support from the COVID-19 situation in Sydney.