Core FI Regain Poise, ACGBs Pare Opening Post-Holiday Losses

Core bond markets found poise despite Fed hawk Bullard noting that he sees a 75bp rate hike as an option (although not his "base case"). Growing hawkish appetites among Fed members contrasted with the PBOC's intention to play a supportive role as China battles the outbreak of Covid-19.

• T-Notes edged higher and last change hands +0-05+ at 119-26, near session highs. Eurodollar futures run up to 3.0 ticks higher through the reds. Cash Tsy yields sit 1.1bp to 2.2bp lower at typing, the curve steepened a tad. The local data docket is limited to housing starts/building permits, with remarks from Chicago Fed Pres Evans also coming up. Worth noting that his colleague Bullard signalled that he sees a 75bp rate hike as an option.
• Aussie bond futures advanced, shrugging off hawkish rhetoric from Antipodean central bankers. YM last deals -2.5 & XM -2.5. Bills trade +2 to - 3 ticks through the reds. Cash ACGB curve bear steepened as trading restarted in Sydney after Easter holidays, but yields then pulled back from best levels. They last sit 6.5-8.7bp higher, off initial highs. The minutes from the RBA's April monetary policy meeting said that economic data warrants a quicker anticipated start to the rate-hike cycle.
• JGB futures climbed after a slightly softer re-open, extending gains after the lunch break. JBM2 trades at 149.42 at typing, 8 ticks above last settlement. Cash JGB yield curve flattened a tad, with 30s leading gains. Japan held a liquidity enhancement auction for off-the-run JGBs with 5-15.5 years until maturity.