Core FI On Firmer Footing Amid Subdued Risk Appetite

Broader risk aversion has sent T-Notes higher in early Asia-Pac trade, as the abrupt ouster of CBRT chief by Turkish Pres Erdogan and press reports outlining continued geopolitical tensions on several familiar fronts have inspired caution. The latest round of Fedspeak saw Mr Powell reiterate commitment to providing stimulus "as long as it takes," with Mr Barkin noting that he sees no signs of unwanted inflation pressures, even as "we are going to see an extremely strong year." T-Notes last trade +0-08+ at 131-15+, in close proximity to the session high of 131-16. Cash Tsy yields trade 0.4-3.5bp lower across a flattened curve, with 10s last seen at 1.689%. Eurodollars trade -0.5 to +1.0 tick through the reds. Focus in the U.S. turns to existing home sales and comments from Fed's Powell, Barkin, Quarles, Daly & Bowman, with one eye on this week's heavy issuance schedule, which includes Thursday's seven-year auction.

• JGB futures have crept higher from the off and change hands at 151.23, 25 ticks above last settlement as we type. Cash JGB yields trade lower across a slightly flatter curve, with 10s outperforming at the margin. The BoJ left the sizes of its 1-10 Year JGB purchases unchanged today. Japanese FinMin Aso commented that the BoJ made appropriate decisions at last week's policy review.
• ACGBs have been driven by familiar risk-off impetus, which leaves YM +2.0 & XM +4.0 at typing. Cash ACGB yields sit +0.2bp to -4.9bp, curve runs flatter. Bills trade unch. to +2 ticks through the reds. Massive floods in NSW forced regional authorities to evacuate thousands of residents and derailed the state's Covid-19 vaccination campaign. Elsewhere, the RBA offered to buy A$2.0bn of ACGBs with maturities of ACGB Nov '24 to May '28, excluding Nov '24. Worth noting that across the Tasman, the RBNZ's LSAP ops saw underwhelming bid/cover ratios of less than 2x for NZGB Apr '27 & NZGB May '41 lines.