Core FI Supported By Downtick In Equities

Global core fixed income markets caught a modest bid as we moved through Asia-Pac hours, with the downtick in the majority of the major equity indices (linked to geopolitical tensions and a huge antitrust fine for Alibaba in China, which dented broader sentiment even as the single name rallied) unwound some early supply related weakness. T-Notes last +0-02 at 131-25+, the cash curve seeing some light twist flattening, with almost all of the early, supply related cheapening (which was led by the belly) unwinding. Comments from Fed Chair Powell reflected the usual tinge of cautious optimism, albeit caveated with well-documented COVID-related risks and the need to continue to support the economy until the recovery "is complete." Headline flow was sparse. Market flow was headlined by a FV/US block steepener (+10.0K vs. -2.8K) and ~4.0K screen lift of the TYK1 130.25 puts. 3- & 10-Year Tsy supply headline the local docket on Monday.

• JGB futures stuck to the confines of the overnight range for almost all of the Tokyo session, last -1. Cash trade has seen the entire curve richen (to varying degrees), with the 3- to 5-Year sector of the curve outperforming, as yields in that zone of the curve fell by 1.5bp. There is nothing in the way of conventional JGB supply due this week, with liquidity enhancement auctions covering the 5- to 15.5-Year and 15.5- to 39-Year buckets providing the only supply points of note.
• YM unch., XM -1.0 at typing, XM moving off lows alongside U.S. T-Notes. There was little reaction to the official launch of the syndication of ACGB Nov '32, with the initial price guidance generally around the firm to average end of broader market expectations.