Firmer But Off Best Levels

Asia-Pac investors were happy to participate in an extension of Tuesday's late NY Tsy rally, building on the momentum that came from a strong 10-Year Tsy auction. Flow dominated in Asia-Pac hours, with pockets of TYH1 buying and a 750 lot lift of USH1 helping support early on. Headline flow was relatively light, with the U.S. House of Reps set to vote on Trump's impeachment on Wednesday. In an interesting turn, some reports have suggested that Senate Majority Leader McConnell may vote in favour of impeaching President Trump. T-Notes last +0-03+ at 136-16+, after some light selling was seen in that contract, while cash trade has seen some modest richening, although the early bull flattening has unwound, with the long end back from Asia extremes.

• JGB futures traded back to unchanged levels in early afternoon dealing, unwinding the morning bid, with little support seen on the back of a 5-Year JGB auction which was probably a little softer than most expected. The auction saw the low price miss broader expectations (which stood at 101.05, per the BBG dealer poll), indeed the average price was in line with the expectations for the low price, while the tail widened marginally and cover ratio edged lower. A widening of the regions covered by the Japanese state emergency is set to be officially announced later today. Futures last +2, with long end outperformance at the fore in cash trade.
• Aussie bonds firmed on the broader core FI bid, resulting in bull flattening, with YM +0.5 and XM +3.5. Sino-Aussie tensions headlined local news flow.