Off Lows On Equity Sell Off

T-Notes held to a narrow 0-04+ range during Asia-Pac hours, last dealing -0-02 at 132-31+, with cash Tsys seeing some light bull flattening as 30s richen by ~2.0bp, benefitting from a downtick in the e-mini space, which saw the S&P 500 contract breaking below technical support in the process. Early trade saw the space subjected to some very light pressure on the back of the dynamics witnessed in the Aussie bonds space.

• JGB futures blipped lower in the wake of the latest round of 30-Year JGB supply, extending on the weakness seen during overnight trade, before recovering on the broader round of equity weakness, last -13 on the day, while 20- & 30-Year paper now underperforms in cash trade as the curve twist steepens. In terms of auction specifics, the auction drew the lowest cover ratio seen at a round of 30-Year supply since July 2016, with the tail widening substantially vs. the previous round of 30-Year JGB issuance, while the low price was some way shy of broader expectations (100.15 per the BBG dealer poll). This meant that it was a particularly weak auction all around, with the recent stabilisation in the longer end of the curve doing little to entice bidders on the back of last week's vol., as the ongoing BoJ monetary policy review continues to provide another layer of uncertainty to matters.
• Meanwhile, Sydney trade sees YM -5.5 & XM -9.5. The market was seemingly disappointed by the lack of RBA purchases to enforce its 3-Year yield target, while its longer dated round of ACGB purchases "only" printed at "normal" sizes after Monday's doubling of purchases covering ACGB's maturing in 2024-2028. The RBA is clearly more at ease with how the market is functioning. The aforementioned round of broad equity weakness allowed longer dated paper to tick away from worst levels of the session.