Relative Outperformance For JGBs, Aus Fiscal Support Matters Eyed

T-Notes held to a very narrow 0-03 range overnight, last dealing -0-02+ at 133-10+ on volume of ~40K. Cash Tsys are unchanged to ~0.5bp cheaper across the curve. There has been little in the way of notable macro news flow during Asia-Pac hours, outside of a BBG report pointing to early discussions surrounding a Biden-led digital trade deal re: countering the influence of China in Asia (which would include the likes of Canada, Japan & Chile). Market flow has been dominated by the previously flagged ~31K screen lift of FFU1, with a total of ~46K lots trading at the same price in that contract overnight.

• Tokyo trade has seen JGB futures respect the range established during the previous after-hours session. The major cash JGB benchmarks trade little changed to ~1.0bp richer on the day. 20s have outperformed in the wake of supply, with the latest round of 20-Year JGB supply seeing the low price print comfortably above broader dealer expectations (proxied by the BBG dealer poll), while the cover ratio edged ever so slightly lower and the price tail saw an incremental widening vs. prev. auction.
• It has been a mundane session for ACGBs, with the latest NAB business survey showing a slight moderation from very upbeat levels (in terms of both confidence and conditions), with the risk seemingly for a lower print next month given the lockdown situation in Sydney. Still, NAB noted that "overall, the survey points to a solid outcome in the June quarter for economic activity - and continues to reflect the support of both fiscal and monetary policy. The experience of lockdowns to date, is that there is a fairly rapid rebound in activity as restrictions are removed - and with most survey indicators still at high levels, the hope is that there is no material easing in hiring and investment intentions which have been critical to the recovery. However, as the economy passes through the rebound phase and into a new period of growth, we would expect some normalisation across the survey variables." YM unch., XM -1.5. The 10+-Year zone of the cash ACGB curve is seeing the largest degree of cheapening on the day, with yields in that zone ~1.5bp higher vs. closing levels. Elsewhere, the Guardian noted that "a new commonwealth financial support package for locked-down greater Sydney is to be announced after the federal government signed off on a cash boost for affected businesses and households. The new Covid assistance package, which was approved by the federal government's expenditure review committee on Monday, was finalised by the federal and New South Wales Treasuries before a joint announcement expected on Tuesday."