Core FI Rally Overnight

T-Notes rallied overnight, as the Asia-Pac session saw the return of appetite for core FI. The initial impetus was likely provided by a continued stalemate in U.S. fiscal talks and yesterday's strong round of 10-Year Tsy supply. T-Notes extended gains as the yellow metal recoiled, while e-minis erased initial gains. Little in the way of headline flow to drive price action. T-Notes last trade +0-05 at 139-11, slightly off highs. Bull flattening crept into the cash space, with Tsy yields last sitting 0.6-3.5bp lower. Eurodollar futures trade 0.5-1.5 tick higher through the reds. Domestic initial jobless claims, 30-Year Tsy supply and comments from Fed's Bostic and Brainard headline in the U.S. today.

• JGB futures were well bid and easily punched through yesterday's highs. The contract last trades at 151.92, +12 ticks vs. settlement. Cash JGB yields fell, the super-long end underperformed. Participants eyed the BoJ's 1-10 Year Rinban ops, which saw purchase sizes unchanged across all three baskets. Above-forecast PPI data out of Japan was ignored.
• In Australia, YM unch. & XM +2.5 as we type. Similar dynamics seen in cash ACGB space, as yield curve has flattened amid demand for the longer end (some flagged this segment is popular with Japanese participants). Australia's labour market data topped expectations, but domestic FI space was unfazed. Elsewhere, the RBA's YCC announcement revealed the same buying intentions as last time, as the Bank offered to buy A$2.0bn of ACGBs maturing in Apr '23 & Apr '24.