Core FI Pull Back From Early Highs

T-Notes have headed lower, moving away from ther initial peak, while e-minis have trimmed losses amid a moderation in the earlier risk-off feel. The contract last sits +0-04+ at 137-05+, with recent headline flow adding little to the initial picture. Early caution was inspired by continued wrestling between GOP & Democratic lawmakers over fiscal matters, worries over Covid-19/vaccine situation, retail market dynamics and below-forecast readings of China's official PMIs, with Caixin M'fing PMI coming up shortly. Cash trade sees Tsy curve bear steepen a tad, with yields last seen unch. to +1.3bp. Eurodollar futures trade -0.5 to +1.0 tick through the reds.

• JGB futures pulled back from early high and trade at 151.75, 7 ticks shy of last settlement. Cash JGB yields are marginally mixed. Several local media outlets flagged potential for an extension to Japan's state of emergency, but noted that the gov't might tweak the list of prefectures covered by the emergency declaration, with the final decision expected this week. On the data front, Jibun Bank M'fing PMI remained in contractionary territory, just.
• The implementation of a five-day lockdown in Perth after the detection of a fresh Covid-19 case has grabbed attention in Oz at the start to the week. Local data docket is pretty packed today. AiG M'fing PMI showed acceleration in the rate of expansion, while the final reading of Markit counterpart remained unch. ANZ job ads growth slowed, but ANZ said they "do not think this is cause for concern." Housing finance data saw the main metrics rise at a faster pace. YM trades -0.5 & XM sits -2.5 (off earlier highs) at typing. Cash ACGB yields are unch. to +2.3bp across the steepened curve. Bills trade unch. to -1 tick through the reds. The RBA offered to buy A$2.0bn worth of ACGBs covering maturities of Nov '24 to May '28, excluding Sep '26.