Early Bid Cools A Little, Tight Ranges In Play

T-Notes held to a contained 0-05 range during overnight dealing, last trading -0-01+ at 132-04 after ticking back from early highs. There was no reaction to Chinese reports pointing to the latest round of details surrounding the continued reshuffle of troubled Chinese property developer Evergrande, while questions surrounding the company's debt obligations continued to swirl. Downside exposure headlined on the flow side, with a 5.0K screen lift of TYX1 130.50 puts seen overnight. Monday's U.S. docket will be headlined by Fedspeak from Bullard, with final durable goods data also due.

• The 7- to 10-Year sector of the JGB curve led the richening (~1.5bp firmer on the day) as the space played catch up to U.S. Tsys, while futures last deal 6 ticks above Tokyo settlement levels, a touch shy of their intraday peak. Local political headlines continue to dominate, with a recent Nikkei source report noting that "Fumio Kishida, president of Japan's ruling Liberal Democratic Party and soon to become prime minister, has decided to dissolve the lower house later this month to hold general elections on October 31." Elsewhere, outgoing Finance Minister Taro Aso has noted he had suggested that the BoJ lower its 2% inflation goal in previous rounds of discussion with BoJ Governor Kuroda. Today's BoJ Rinban operations drew the following offer/cover ratios: 1- to 3-Year: 2.57x (prev. 2.75x), 3- to 5-Year: 2.64x (prev. 1.99x), 10- to 25-Year: 3.03x (prev. 2.07). Focus now moves to tomorrow's 10-Year JGB auction.
• Aussie bond futures meandered to the beat of the broader tone, with NSW and the ACT out on holiday, resulting in the closure of cash ACGB trade. The local COVID situation once again failed to provide any real impetus for the space. YM & XM both -0.5 at typing.