Evergrande Vol. Evident

Global core FI markets unwound their early Asia-Pac bid and more, before moving back to the middle of their respective daily ranges. Initial worry surrounding all things Evergrande as participants awaited the re-opening of mainland Chinese markets after the elongated holiday weekend subsided. There was some respite for broader risk assets as headlines noted that Evergrande will make a negotiated bond coupon payment for onshore bonds which falls due tomorrow, although no further details were forthcoming. There were no details re: the payment of coupons on a US$-denominated bond also due tomorrow (although there is a 30-day grace period in play there there), nor on the size of the payment that will be made when it comes to the onshore bond coupons. The lack of clarity tempered the broader bounce in risk appetite.

• T-Notes -0-01 at 133-05 as a result, with cash Tsys little changed to 0.5bp cheaper across the curve. The FOMC monetary policy decision headlines the broader docket on Wednesday, with the central bank's commentary surrounding tapering and the particulars within the SEP set to be scrutinised.
• JGB futures last print +4 on the day, after being subjected to the driving forces outlined above. The BoJ's latest monetary policy decision was a bit of a non-event, with the Bank leaving its broader monetary policy settings unchanged, while it lowered its assessment for exports and production. The market will be closed tomorrow as Japan observes a national holiday.
• Over in Sydney, YM unch. & XM +1.0, with longer dated cash ACGBs 1.0bp richer on the day after the space followed the broader gyrations. A$1.0bn of ACGB Apr '26 supply was well received, with the weighted average yield printing 0.97bp through prevailing mids at the time of supply, while the cover ratio printed above 6.00x.