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Light Pressure Emerges As Core FI Space Digests Risk-Positive Factors


T-Notes were subject to some light pressure in early trade, as a bipartisan group of U.S. lawmakers said they will unveil a $908bn stimulus package on Monday (although its passage is by no means guaranteed), Pfizer Covid-19 vaccine won emergency approval (deliveries could start as soon as today) and UK PM Johnson & European Commission Pres von der Leyen instructed their negotiating teams to continue Brexit talks. The mix of aforementioned headlines resulted in some risk-on flows early on, despite a cyberattack on U.S. Tsy, with WaPo reporting that it prompted a National Security Council meeting. T-Notes last sits -0-04+ at 137-30+. Cash Tsy curve has bear steepened, yields trade 0.5-1.5bp cheaper. Eurodollar futures last seen unch. to -0.5 tick through the reds.

  • JGB futures tried to recoup the initial dip but slipped again and last trade at 152.08, +2 ticks vs. last settlement. Cash JGB yields are marginally mixed, with 40s underperforming. Fiscal matters remain in focus; the Nikkei reported that the current FY JGB issuance will top Y112tn, which is marginally above the baseline assumed in recent weeks. Most figures in the latest Tankan Survey were better than forecast, although all industry capex registered a surprise decline.
  • In Australia, YM last +0.8 & XM +1.7 (the latter has edged lower). Cash ACGB curve runs flatter, yields sit +0.5bp to -1.7bp. Bills trade unch. to -1 tick through the reds. The RBA offered to buy A$2.0bn of ACGBs with maturities of Nov '24 - May '28. News-wise, Sino-Australian frictions remain in focus.

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