JGB Auction Sees Lowest B/C Since 2015

T-Notes head into the European open softer after oscillating around neutral levels through the Asia-Pac session. Headline flow was light through the session, a political impasse over the debt ceiling remains US President Biden urged Republican senators to "get out of the way" and let Democrats suspend the nation's debt limit. T-Notes dropped to fresh session lows after e-minis regained some poise having spent the early part of the session on the slide. T-Notes last -0-05+ at 131.29, cash Tsys ~1bp to ~2bp cheaper, with flattening in play as the belly leads the weakness. ISM Services PMI will headline the US data calendar on Tuesday.

• JGB's are firmer, the 10-Year ticking higher through the session as equities softened, a hangover from the drop on Wall Street. The latest round of Tokyo CPI failed to impact the space. The 10-Year auction saw the lowest price lower than forecast, though bid/cover did slip from the previous auction and hit the lowest since 2015. It appears questions surrounding the future path of Japanese fiscal policy have deterred investors. 10-Year future up 2 ticks having come off session highs post auction.
• Aussie bonds meandered lower, largely ignoring the RBA's unchanged rate announcement. The latest RBA statement didn't really offer much, with the theme of economic uncertainty on the back of the COVID-19 situation remaining evident, in addition the uneven impact of the virus on different sectors of the economy. YM down 0.5 ticks, XM down 1.5 ticks heading into European hours.