Narrow Ranges In Play, Some Idiosyncracies Eyed

T-Notes stuck to a tight 0-03 range during Asia-Pac hours, lacking any follow through above yesterday's best levels despite a brief and shallow look above, likely owing to a lack of tier 1 macro news flow (there was some attention on Sino-U.S. relations surrounding the passage of a U.S. naval ship through the Taiwan strait and subsequent rhetoric re: the matter from China, although this did nothing for broader markets). The contract last deals +0-01 at 132-12+, while cash Tsys observed some light twist steepening, as longer dated Tsys cheapened by ~1.0bp.

• JGB futures stuck to a narrow range, last +1 on the day. The major benchmarks across the cash curve run little changed to ~1.5bp richer, with some modest outperformance for the super-long end of the curve. Local news flow remains light, with a slower rate of expansion witnessed in the latest flash m'fing PMI print, while a deeper rate of contraction was seen in the services reading. The latest round of 1- to 3-Year and 5- to 10-Year BoJ Rinban ops saw a modest uptick in offer/cover ratios. Elsewhere, BoJ Gov. Kuroda met with Japanese PM Suga, although it seemed to be a routine catch up between the two, touching on BoJ policy and the broader global economy.
• Aussie bonds shrugged off the imposition of deeper COVID restrictions in parts of Sydney, with YM & XM both +2.0 at typing. CBA's RBA call (they now look for a Nov '22 hike from the RBA) knocked the space back from best levels of the day during the Sydney morning. A$1.0bn of ACGB May '32 supply was easily absorbed, with the cover ratio nudging higher vs. the previous auction, while the weighted average yield printed .25bp through prevailing mids at the time of supply (per Yieldbroker). Elsewhere, Australia's latest round of monthly prelim trade data had nothing in the way of a notable impact on the space, as expected. Finally, the latest round of rhetoric from RBA's Ellis offered nothing new re: monetary policy.