Firmer In Asia Hours, But Off Best Levels

Core fixed income markets drew support from the wider equity weakness evident during early Asia-Pac dealing, with some focus on the spill over move lower in Chinese tech names owing to U.S. regulatory scrutiny on the space. Uncertainty surrounding the Russian shelling of a Ukrainian facility with an experimental nuclear reactor also supported. There has been a light retrace from best levels, with a pretty sharp turn away from lows during early afternoon equity dealing in both Hong Kong & China allowing e-mini futures to unwind their early Asia losses. Note that the timing of the equity move will generate speculation re: the potential for Chinese national team involvement.

• TYM2 prints +0-07+ at 126-08 around the middle of its 0-10 Asia range. Cash Tsys run flat to 1.5bp richer, with the belly leading. UoM sentiment data headlines the NY economic docket on Friday, while President Biden will make an address re: Russia (at 10:15 Easter/15:15 London). There are suggestions that Biden may use the address to head a G7 call for an end to Russia’s preferred trade status, which would clear the way for further tariffs on Russian goods.
• JGB futures unwound their overnight losses as we moved through the Tokyo morning, aided by the aforementioned risk-negative pressures. Cash JGB trade saw the bulk of the major benchmarks bid in the morning, with the long end playing catch up in the afternoon. Still a late uptick in domestic equities (linked to wider dynamics) kept a lid on the space. This left futures +5 and cash JGBs little changed to 1bp richer across the curve come the bell. There hasn’t been much in the way of notable domestic headline flow. The head of the BoJ’s monetary policy department noted that "unless there's risk of second-round effects, such as (an excessive) rise in wages, it's inappropriate to respond with monetary tightening," in an appearance in front of parliament. Elsewhere, Japanese Finance Minister Suzuki flagged that the government isn’t looking at deploying an economic fiscal package at present, while it is keeping an eye on the impact of the price of oil re: households & firms.
• There wasn’t much to take from RBA Governor Lowe’s latest address. Lowe continued to embed optionality into lift off timing when it comes to the cash rate. He once again noted that it is plausible that the cash rate could start to rise this year or in ’23, while flagging a move closer to sustainable inflation within the Bank’s target range (although he noted that Australia is not there yet), which means that he isn’t feeling any “pressure” when it comes to hiking rates. Lowe then pointed to close attention re: inflation psychology. He also noted that there are multiple strong internal candidates to replace outgoing Deputy Governor Debelle. Futures nudged higher in early Sydney dealing, but finished shy of best levels, with YM -3.6 & XM -2.9.