Core FI Power Ahead Amid Risk-Off News Flow, Antipodean QE Ops In Focus

Weekend headline mix provided a risk-impetus, putting a bid into core FI across the Asia-Pac region. T-Notes remained in demand and last trade +0-11+ at 131-18+ as we are heading for the London session, in close proximity to the Asia-Pac high of 131-20+ and the prior trading day's high of 131-21+. Cash Tsy curve bull flattened, yields last trade 0.6-5.5bp lower. Eurodollar futures run -0.5 to +1.5 tick through the reds. Turkish Pres Erdogan's decision to replace the CBRT chief grabbed most attention in early trade, with simmering geopolitical tensions (incl. a Telegraph report re: planned U.S. cyber attacks against Russia) providing further reasons to remain cautious. The latest portion of Fedspeak saw Mr Powell reiterate the commitment to providing stimulus "for as long as it takes," while Mr Barkin saw no signs of unwanted inflation pressures. There is more Fedspeak coming up today, with existing home sales also due out of the U.S. Local issuance slate is particularly heavy this week, with focus on Thursday's seven-year note supply, after the previous auction saw the lowest bid/cover ratio on record.

• JGB futures ebbed off highs after the Tokyo lunch break but remained afloat and last sit at 151.26, 28 ticks above settlement. Cash JGB yield curve bull flattened, with 20s outperforming. In local news, Japan confirmed that the Tokyo Olympics will take place without foreign spectators, while a 6.9 mag. quake hit off the coast of Japan. The BoJ left the sizes of its 1-10 Year JGB purchases unch. There was little in the way of market-moving insights in the latest addresses from BoJ Gov Kuroda & Japanese officials.
• ACGBs powered ahead, YM last sits +2.0 & XM +5.0, both just shy of best levels of the Asia-Pac session. Cash ACGB yields sit +0.6bp to -6.1bp across a flattened curve, while bills run unch. to +2 ticks through the reds. New South Wales saw adverse weather conditions result in floods, which forced the authorities to evacuate thousands of people and disrupted Covid-19 vaccinations. QE operations on both sides of the Tasman grabbed attention. Firstly, the RBA offered to buy A$2.0bn of ACGBs with maturities of Nov '24 to May '28, but excluding Nov '24 ahead of this Friday's sale of ACGB 0.25% 21 Nov '24. Secondly, ACGBs may have been aided by spill-over from the RBNZ's LSAP operations, which saw very light offers for for NZGB Apr '27 & NZGB May '41, with bid/cover ratios slipping below 2.0x.