Firm In The Wake Of Supply

Regional players were happy to buy what was left of yesterday's dip during Asia-Pac hours, after the latest round of 5-Year supply pointed to underlying demand in the space, after it stopped through WI by 0.9bp, while the cover ratio printed comfortably above the recent averages as dealer takedown slid and indirect participation picked up, providing support into the NY close. This extended through Asia-Pac hours, with yields 0.3-1.5bp richer on the day. T-Notes held a tight, 0-04 range, last +0-03 at 139-13. Focus is squarely on Fed Chair Powell's Thursday address.

• JGB futures clung onto the coattails of the move in Tsys, last trading +12, with the long end outperforming in cash trade. There was little to note locally, with comments from ministers Suga and Nishimura offering little to change the broader brushstrokes in play at present. The latest 2-Year auction saw the low-price top dealer exp. with the tail narrowing and cover ratio nudging higher vs. prev. auction.
• Tsy market dynamics and the removal of yesterday's supply pressure provided a bid for the Aussie bond space, which was long end driven. The shorter end of the curve drew support from the RBA re-entering the ACGB buying sphere as it flagged a cumulative A$2.0bn of ACGB Apr '23 and Ap '24 purchases. Q2 private CapEx data had no notable impact on the space.