Core FI Mostly Lower

Asia-Pac trade saw fresh ~12-month highs for 30-Year Tsy yields and Alibaba launch a $5bn round of multi-tranche $ supply, covering 10-, 20-, 30- & 40-Year paper, although the Tsy space moved off worst levels, with equities trading on the defensive as U.S. President Biden's nominee for Commerce Secretary noted that the likes of Huawei & ZTE should remain on the restricted trade list (we would argue that this doesn't provide a shock, but dented broader risk sentiment in a limited overnight session). T-Notes still -0-02+ on the day at 136-23, while the cash curve has seen some modest twist steepening. Swap spreads are a little wider on the day, which would have helped the early upward momentum in yields (10s and 30s have cheapened for 5 consecutive days on a closing basis). On the flow side, an 800 lot block buyer of WNH1 was seen.

• The wings of the cash JGB curve were firmer, looking through the offshore impetus. However, the belly lagged all day, and has actually cheapened during afternoon trade, underperforming for a second straight day as futures added to their overnight losses, with the latter last -10. The latest 30-Year JGB auction wasn't the firmest, but wasn't as weak as last month's, with the tail pretty steady, although the low price did match broader dealer exp. (as proxied by the BBG poll), while the cover ratio recovered from last month's dip to print at "normal" levels.
• YM -1.0, XM -5.5, with the latter operating through its recent lows. The curve holds steeper on the day, with no respite for those of a bullish disposition, even with any hedging flow surrounding the pricing of the A$1.6bn tap of NSWTC's Mar '33 line subsiding. As we have flagged previously, there is speculation that the syndication of a new ACGB Nov '32 could be announced via the weekly AOFM issuance slate, due to be released on Friday, while fresh multi-month highs for U.S. 30-Year yields and the trans-Tasman impetus from NZ bonds stemming from RBNZ re-pricing will be adding pressure from abroad.