Headwinds

It has been a soft start for core FI, which have drifted lower from the off. Regional headline flow has been limited, but some fiscal headlines from Japan and Australia have grabbed attention.

• Light selling pressure has hit T-Notes, the contract trades -0-04 at 130-31, printing session lows. Cash Tsy curve runs flatter, unwinding some of yesterday's steepening. Yields trade 0.9-2.8bp higher across the curve. Eurodollar futures run 0.5-2.0 ticks through the reds. Fed's Waller will discuss the economic outlook in a speech to the Forecasters Club of New York today.
• JGB futures have faltered and last change hands at 152.11, 1 tick shy of Thursday's settlement & hitting fresh session lows. Cash JGB yields are mostly a touch lower. The sole highlight of the local economic docket today is the BoJ monetary policy decision. Elsewhere, fiscal talk has been doing the rounds, as NHK reported that the gov't is preparing to compile a budget in the high Y107tn range, while Sankei noted that Japan is set to keep JGB issuance in the Y30tn range.
• Aussie bonds have lost some altitude, YM trades -0.5 & XM -3.5, with YMXM edging higher. Cash ACGB yields trade -0.5bp to +5.3bp across a steepened curve. Bills trade 1-5 ticks through the reds. The AOFM slashed its planned bond issuance for FY2021-22 to A$105bn from their July forecast of A$130bn.