Nobody Knows

U.S. Tsys recovered from early Asia lows, with early dealing focused on the perception surrounding the likelihood of a Biden victory in the White House, before a relatively strong showing from Trump across the early battleground states saw betting market pricing move in his favour. Still, a likely victory for Biden in Arizona, coupled with longer running counts across several key states has markets looking at the prospect of a drawn out election process lasting days, if not weeks, allowing Biden to re-narrow vs. Trump in the betting markets.

• A strong 10-Year auction added to the upward impetus from the U.S. in JGB futures, with the auction tail holding narrow, cover ratio above 4.0X and low price topping dealer estimates as proxied by the BBG poll. Futures now +12 vs. Monday's settlement, with the contract recouping the holiday catch up losses seen in early dealing. The belly of the cash JGB curve has outperformed on the move in futures. Rhetoric from BoJ governor Kuroda failed to add anything fresh to the monetary policy discussion, as he focused on the need for the smooth functioning of FX markets, as he repeated well-trodden rhetoric. Elsewhere, Finance Minister Aso seemed fairly non-committal re: the potential details of any fresh stimulus package, as he reiterated the government's desire to act in a "firm" manner.
• Aussie Bonds traded at the whim of offshore events, with YM -1.0 and XM -3.0 as the latter recovered from its SYCOM lows.