Modest Pressure To Start The Week

U.S. Tsys came under light pressure in the first Asia-Pac session of the week, with positive fiscal musings out of the U.S. and apparent positive developments surrounding U.S. President Trump's health providing the early impetus. T-Notes held to a 0-03+ range, last -0-02+ at 139-11+, while cash Tsys sit unchanged to 1.5bp cheaper as the curve bear steepens.

• There was no meaningful, lasting underperformance for super-long JGB paper in the morning, with light cheapening apparent across the curve as participants assessed Friday's after-Tokyo hours moves in U.S. Tsys as well as what we have seen in early Tsy trade this week, with some also looking for potential setup ahead of tomorrow's 30-Year JGB supply. Japanese swaps were generally wider across most of the curve, with that particular curve showing a more conventional steepening pattern. 1-3 & 5-10 Year BoJ Rinban ops saw their respective sizes unchanged, with cover ratios moderating vs. prev. ops. Futures traded lower, in the morning session, but went into lunch off worst levels, -8 vs. settlement.
• Aussie bond futures extended their SYCOM weakness as factors weighing on U.S. Tsys applied some light pressure to the space, with YM -1.0 and XM -5.0 at typing. Cash market trade was closed and liquidity thinned owing to several state holidays in Australia. Focus is well and truly on tomorrow's local risk events, namely the latest RBA monetary policy decision and the federal budget.