Narrow Ranges In Play Overnight, Lack Of Catalysts Noted

T-Notes have stuck to a narrow 0-02+ range, last +0-00+ at 138-03, with cash Tsys sitting unchanged to 1.2bp richer across the curve, as the long end sees some marginal outperformance. The space has shrugged off the release of the latest round of Chinese economic activity data, PBoC MLF activity and comments from U.S. Senate Majority Leader McConnell as he re-affirmed the need for Congress to bridge its differences and come to a deal re: fiscal support before Christmas (this isn't new and McConnell has maintained his well-defined red lines re: the matter in recent days).

• It was a sedate session for JGB futures, with the contract continuing to operate in familiar territory, last +1 on the day. The cash curve has seen some twist steepening, given the potential for additional 40-Year JGB issuance (as outlined by primary JGB dealers at recent MoF meetings and flagged previously), which could be deployed to finance the latest supplementary budget (although, as outlined previously, total issuance requirements for the package will seemingly be in the region of the median view, avoiding the more burdensome end of the scale. The maturity mix of the issuance will be key).
• The Aussie bond space looked through the release of the minutes of the RBA's December monetary policy decision, with YM -0.2 and XM +0.5. There was always a high bar for the release re: its potential to be market moving, with the Bank affirming recent rhetoric from the RBA Governor surrounding the evolution of its QE scheme: "Members agreed to keep the size of the bond purchase program under review. At its future meetings, the Board will closely monitor the effects of the bond purchases on the economy and on market functioning, as well as the evolving outlook for jobs and inflation. The Board is prepared to do more if necessary." Elsewhere, Sino-Aussie tensions remain at the forefront.