Off Lows, Bid In E-Minis Keeps Space In Check

It has been a slow grind away from the early lows for T-Notes, with little in the way of notable macro headline flow evident since the Asia-Pac re-open. The contract last prints unch. at 138-03+, operating in a 0-04+ range. Cash Tsy trade has seen some light bull flattening, although yields are less than 1.0bp richer than settlement across the curve. Hope for further positive COVID-19 developments in the coming days has boosted most major equity indices, with core global FI a little more insulated, given the global COVID outlook and fresh restrictions that are evident/pending in the U.S. & Europe. On the data front, Chinese retail sales data for the month of October was a little soft, while the industrial production reading out of the same country was a touch firmer than expected.

• Early trade saw an unwind of the modest overnight losses for JGB futures, with the contract last -1 vs. Tokyo settlement levels, after holding to a tight range in morning dealing. Cash JGBs saw modest richening, while swap rates nudged higher, leading to a modest widening of swap spreads. Local prelim Q3 GDP data was firmer than expected, but seen as very much in the rear-view mirror, given the evolving COVID situation, both at home and abroad.
• In Australia YM is unchanged, while XM is -1.5, with the grind away from lows in U.S. T-Notes that we have outlined elsewhere helping the space off worst levels, even with ACGB supply pressure evident. Locally, the AOFM stepped in with an offer to purchase A$1.5bn of ACGB Apr '24, in order to enforce its 3-Year yield target, which seemingly provided some incremental support (the move came alongside the Bank's scheduled A$2.0bn round of purchases covering the lower end of maturities within the reach of its purer QE scheme).