Core FI Off Best Levels As Chinese Equities See A Relief Bid

A bid for Chinese equities amid suggestions that China will not ban domestic companies from listing equities in the U.S. (per CNBC sources) allowed core FI to move away from best levels of the day during Asia-Pac hours, although ranges were contained.

• T-Notes last +0-05 at 134-13+, operating within a 0-03+ range on volume of ~68K. Cash Tsys are little changed to 1.0bp cheaper across the curve, with a very modest bear steepening bias evident after the light bull flattening that was evident during Fed Chair Powell's Wednesday press conference. 8.0K of screen selling of TUU1 provided the highlight on the flow side. The early NY evening saw the Senate advance the bipartisan infrastructure agreement to the debate/amendment stage, with Democratic Senator Sanders noting that he has the 50 votes required to force the measures through.
• JGB futures continued to coil in Tokyo trade, last printing 2 ticks below yesterday's settlement levels. Cash JGBs were little changed to ~1.0bp richer, with some light outperformance for 30s and 40s evident. Much of the local focus continues to fall on the domestic COVID situation (Chiba is set to request the implementation of a state of emergency today). There was little to extract from the latest 2-Year JGB auction, which saw the low price meet broader dealer expectations (as per the BBG dealer poll), with the cover ratio marginally softer than the prev. auction as the tail moved a little wider. Still, there were no problems with digestion of the supply.
• The record daily number of new COVID cases in NSW (239), coupled with tighter mobility restrictions in 8 Sydney virus hotspots provided some incremental support for Aussie bond futures, before the aforementioned downtick from best levels. YM & XM are unchanged at typing. Appetite for a notable push higher seems to be lacking at present, as the market awaits fresh cues.