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Precatorios Bill May Be Voted On This Thursday


Chairman Powell


Resumes Its Downtrend

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Core FI markets have regained some poise in recent dealing after a bit of a drift lower in early Asia-Pac trade. The initial drift lower perhaps focused on yesterday's cheapening in the long end of the Tsy curve & ACGB dynamics.

  • The bid seemingly came in after little-known news provider REDD noted that Evergrande Group secured an extension on the maturity of a $260mn bond issued by Jumbo Fortune Enterprises, the JV it is involved in and guarantees the bonds for. The article suggested that the extension period will last more than 3 months, citing sources. The defensive tone may just be a case of the market not liking the continued uncertainty that the 3-month+ grace period indicated in the article may create, as it isn't an ultimate fix to the issues at hand.
  • TYZ1 last -0-05+ at 130-15, with some very modest twist flattening witnessed on the cash Tsy curve, although the major benchmarks sit within -/+0.5bp of Wednesday's closing levels. A 10K block buyer of TYZ1 129.50 puts headlined flow overnight. Weekly jobless claims data, the latest Philly Fed business outlook survey, 5-Year TIPS supply, the Tsy's month-end supply announcement and another address from Fed Governor Waller are all due on Thursday.
  • JGBs futures were relatively insulated, holding within the confines of the overnight range, even as Japanese equities struggled and the JPY turned bid. Cash trade sees the major JGB benchmarks run little changed to 2bp richer across the curve.
  • Over in Sydney YM +3.5 and XM +1.5. Earlier in the day, the RBA held off from enforcing its YCT mechanism, choosing not to purchase ACGB Apr-24 in today's typical purchase window. This weighed YM as some in the market were disappointed (we suggested that the previously flagged move from the RBA earlier this week limited the chances of such purchases today). ACGB Apr-24 traded above 0.16% in yield terms, a little over 6bp above the RBA's 0.10% target, before recovering. Elsehwere, semi issuance saw QTC price A$1.5bn of Aug '33 paper. The bid off lows in ACGBs was in play before the broader rally took hold.