Off Best Levels But Still Comfortably Firmer In Asia

TYU2 sits +0-17 at 121-28+ hovering a little above the middle of its 0-16+ range, operating on above average volume of ~128K. Meanwhile, cash Tsys run 3-4bp richer across the curve. The latest round of Tsy demand comes after a recent tweet from Global Times commentator Hu Xijin, which noted that “Based on what I know, in response to Pelosi's possible visit to Taiwan, Beijing has formulated a series of countermeasures, including military actions.”

• The early overnight bid in U.S. Tsys came as the Asia-Pac region geared up for what seems to be the inevitable trip to Taiwan for U.S. House Speaker Pelosi, with Sino-U.S. tensions remaining front and centre when it came to the thought process of participants.
• The early bid seemed to run out of some steam after the failure of bulls to challenge the 2.50% level in 10-Year yield terms resulted in a bit of a moderation of strength.
• On the flow side, a round of screen buying through Monday’s high in TYU2 and block lift of the same contract (+1.5K) helped the space higher during the early Asia rally.
• Note that the space looked through the bullish impulse from ACGBs in the wake of the latest RBA monetary policy decision.
• Tuesday’s NY session will see the release of JOLTS job opening data, in addition to several rounds of Fedspeak (Bullard, Evans & Mester). Pelosi’s movements will also be eyed, with reports suggesting she will land in Taiwan somewhere between 15:00-15:50 London time (10:00-10:30 NY).