Pre-LNY Feeling, Aussie & U.S. FI Bid

The pre-LNY feel was well and truly in play in the core FI space during Asia-Pac hours, with some light bull flattening witnessed in cash Tsys after 30s failed to make a meaningful break above 2.00% on Monday, with the pullback from intra-day cheaps seemingly resulting in some steepener unwinds after fresh multi-year highs for the 5-/30-Year yield spread. 30s sit ~1.5bp richer at typing, while T-Notes have held to a 0-03 range in overnight trade, last -0-00+ at 136-21+, with limited flow apparent.

• JGB futures have held to a tight range during Tokyo hours, with the contract last +2 vs. settlement after an early, shallow look above the overnight range. Cash trade has seen some underperformance for the longer end and 5-Year zone, although longer dated swaps are tighter on the day, with none of the signs of foreign swap payers evident, as the recent LCH/JSCC 30-Year swap spread widening flattens out. The latest round of BoJ Rinban ops saw purchase sizes left as they were, while the offer/cover in the 25+ Year ops moderated. Elsewhere, we learnt that the Japanese cabinet has decided to spend a little over Y1.1tn of its emergency reserves to fund measures to deal with COVID-19.
• Sydney trade has seen some curve flattening, YM unch and XM +4.0, although there is no outright sign of hedging pressure around SAFA's '34 issuance as of yet. The latest local NAB business survey saw an uptick in the confidence metric, although the current conditions index moderated, with the survey collator noting that "given conditions remain above average, notwithstanding the fall this month, and lead indicators continue to trend higher, the survey continues to point to an ongoing recovery."