Core FI Supported In Asia, Liquidity Thinned By Japanese Holiday

Core FI was better bid during Asia-Pac trade, although there was little in the way of headline flow to support the move.

• T-Notes +0-03 at 135-13+, with some looking to month-end extensions that are a shade above average. Cash Tsys are closed until London hours owing to the observance of a Japanese holiday.
• We suggested that the early bid in the longer end of the ACGB curve could be a result of cross-market plays vs. the U.S., while the bid in the shorter maturity ACGBs/red bill contracts may suggest that participants believe that the recent move lower has gone too far, too fast, meaning that some may be establishing fresh longs after the recent flush out. YM +2.0, XM +4.0 ahead of the close, with the overnight steepening more than unwound. Elsewhere, speculation did the rounds re: the potential for the RBA to become more active with its ACGB purchases in coming days, given the recent sell off and steepening seen between ACGB Apr '24 & Nov '24.