FOMC Awaits

T-Notes deal unchanged at 132-17 at typing with the contract holding to a narrow 0-03 range overnight. Cash Tsys print unchanged to 1.0bp cheaper across the curve. Participants remain focused on Wednesday's FOMC decision, while the release of the monthly Chinese economic activity datapoints will provide some interest in the interim. There was nothing in the way of tangible reaction to the latest moves by Chinese policymakers re: stemming the rally in commodity prices.

• The Tokyo morning saw some weakness in the longer end of the JGB curve, which was perhaps linked to growing speculation surrounding a snap election and linked fresh fiscal support package, with local press reports pointing to such matters perhaps playing out in September. The long end has now retraced some of the early weakness. Futures stuck to the confines of the overnight session's range, last -4 on the day. The latest round of BoJ Rinban operations revealed a moderation in the offer to cover ratios for the 1- to 3- and 3- to 5-Year buckets (vs. prev. operations), while the 5- to 10-Year bucket saw an uptick in the cover ratio.
• Aussie bond futures struggled for any fresh traction, consolidating above their respective overnight lows within tight ranges, leaving YM -0.9 & XM -3.4 The cash ACGB curve has steepened, playing catch up to the overnight moves in futures, with longer end bonds running as much as ~4.0bp cheaper at typing.