Headline Watching

A lack of macro headline flow made for tight Asia-Pac trading, at least for the core FI space.

• Light steepening was seen in Asia-Pac cash Tsy trade, with yields 0.2-1.9bp cheaper across the curve, while T-Notes held to a narrow 0-03+ range, last -0-03 at 139-11 as participants continue to headline watch. Flow-wise, we saw some light downside interest, with TYV0 138.50 puts trading in fairly limited size on screen (~5.0K)
• JGB futures are off of best levels, with little in the way of local broader headline flow apparent, with the contract running out of steam after a look through the overnight highs. The contract is last +3 vs. settlement levels. Chief Cabinet Secretary Suga has confirmed that he will make a public address later today re: a potential run for Prime Minister, as was reported earlier this week. Elsewhere, BoJ Deputy Governor Wakatabe flagged the potential for a BoJ policy review (a la Fed & ECB), in addition to expressing the need for better coordination between monetary and fiscal policy moving forward. On the Rinban front, the BoJ left the size of its 1-5 & 10-25 Year purchases unchanged, with the most notable takeaway from the breakdown being an uptick in the cover ratio in the 10-25 Year ops (although 3.48x isn't particularly elevated).
• YM unchanged, XM +2.5, with the latter easing from best levels alongside the marginal cheapening in the U.S. Tsy space. Q2 Australian GDP data was softer than expected, although the Y/Y print was largely in line with the RBA's central scenario. We also saw another firm round of ACGB supply, this time covering the Nov '25 line.