Core FI Supported By Equity Headwinds, Tsys Little Changed

Participants are seemingly comfortable with current U.S. Tsy valuations, mostly looking through some pressure on the broader equity space during Asia-Pac dealing. T-Notes have stuck to a narrow 0-03 range thus far, last printing +0-00+ at 132-18+, with less than 75K lots changing hands. Cash trade has seen some modest twist steepening of the curve, with 30s cheapening by ~1.0bp while paper out to 7-Years sits ever so slightly firmer on the day.

• The local COVID situation in Japan & related, seemingly impending, declaration of states of emergency across several regions (including Tokyo) has supported the JGB space as the Nikkei 225 trades heavily again, with the belly of the curve leading (7s richening by a little over 2.5bp on the day). The outperformance in the belly is supporting futures, with that contract last +20 on the day, building on overnight gains. The BoJ left the sizes of its 1- to 3- & 5- to 10-Year JGBS as was, with little in the way of meaningful movement in the offer/cover ratios.
• Aussie bonds drew some light support from the broader backdrop, as futures added to the overnight uptick, YM +1.5, XM +5.0, with nothing in the way of impact from another solid round of ACGB supply, nor from local data.