Lacking Conviction

Core FI contracts struggle to find poise despite poor showing from regional equity markets & worries surrounding China's COVID-19 situation. Headline flow has been light so far and all eyes are on Chinese inflation data, coming up shortly.

• T-Notes are moving away from session lows (117-25+) as a risk-off feel takes hold, they last trade -0-01+ at 117-28. Eurodollars are little changed, last trade -0.5 to +0.5 tick through the reds. U.S. Tsy yields have inched higher in cash trade, last sit 0.3-0.9bp higher across the curve. U.S. CPI provides the main point of note on the local docket today, with headline inflation expected to have topped 8% in May. Also coming up is Uni. of Mich. Sentiment.
• JGB futures re-opened on a slightly firmer footing and have oscillated within a well-defined range thereafter. They last deal at 149.56, down 9 ticks vs. previous settlement. Cash JGB yields barely deviate from neutral levels, with benchmark 10-Year yield now dangerously close to the 0.25% ceiling of its permitted trading band.
• Cash ACGBs sold off as cash Sydney trade re-open, with spillover from the NY session in play. Yields last sit 2.2-3.7bp higher across the curve. YM trades -3.0 & XM -2.6, with bills running 1-4 ticks lower through the reds. Reminder that the AOFM will publish its weekly issuance slate at the top of the hour.