Off Best Levels, Tight Ranges In Play

T-Notes last +0-02+ at 130-13+, operating within a 0-05+ range overnight, with cash Tsys running unch.-1.5bp cheaper across the curve, unwinding a small portion of Friday's late rally/bull flattening in the process. The moves witnessed early this morning have likely been geared towards regional Asia players looking to fade Friday's rally/profit taking on any short-term longs, in addition to fresh cycle highs for crude futures, as opposed to reaction to headline flow. The weekend saw Tsy Sec Yellen note that she exp. inflation to remain high through H122, while playing down worry of a loss of control when it comes to inflation. Elsewhere, headlines have pointed to progress in the fiscal back and forth amongst Democrats on the Hill, although no ultimate solution was offered. Regional Fed manufacturing indices will headline during Monday's NY session, with the Fed now in its pre-meeting blackout period.

• Cash JGB trade hasn't seen anything in the way of a convincing bid in the wake of Friday's U.S. Tsy rally, while futures only managed to briefly recover their overnight losses before turning lower again, with the contract last -4. Local headline flow remains light, with most of the focus falling on political matters flagged earlier today. This afternoon's liquidity enhancement auction for off-the-run 15.5- to 39-Year JGBs was fairly bland, with nothing in the way of notable movement in spreads and bid/cover vs. the previous liquidity enhancement auction covering 15.5- to 39-Year off-the-run paper.
• Aussie bond futures have ticked away from best levels after the early catch-up bid (with reference to Friday's late NY richening in U.S. Tsys) provided some support to the space. YM unch. & XM +0.5 at typing. Cash ACGBS have seen some bull flattening, with the longer end firming by ~2.0bp. The latest round of ACGB Nov-24 supply saw solid demand (see earlier bullet for more details), while the RBA stuck to its scheduled round of ACGB purchases, with no need to enforce its YCT mechanism after such purchases were made on Friday and given that favourable prices dynamics (from the point of view of the RBA) have been observed since.