Low Conviction Ahead Of FOMC

Tsys showed nothing in the way of a meaningful reaction to the latest round of positive fiscal rhetoric out of DC, with T-Notes last +0-04+ at 138-00, while cash Tsys run +0.2bp to -0.5bp vs. closing levels (2s underperform), in what has been a limited pre-FOMC Asia-Pac session. 30K worth of TYF1 139.00 call block flow has provided the highlight thus far, with the trade looking like short cover.

• JGB futures softened in early afternoon trade, last -4, with the details of the BoJ's latest round of 1-10 Year Rinban ops revealing an uptick in the offer/cover ratios across the 3 buckets that cover that sector of the curve, while the purchase sizes were left unchanged. Yields have lacked any clear sense of direction during the session. Local headline flow has been light, with comments from Economy Minister Nishimura confirming the suspension of the Go To travel campaign over the new year period and offering little new re: broader fiscal matters. Local data had no impact on the space.
• In Australia, YM sits -0.4 with XM +0.2 at typing, as the latter ticked away from lows as we moved through the Sydney session. The slow uptick was perhaps linked to headlines which revealed that Australia will lodge a complaint with the WTO re: Chinese barley tariffs, reserving the right for further WTO actions against China in future. The move shouldn't really come as a surprise but does represent the latest escalation in Sino-Aussie tensions. Local data provided no real impetus for the space.