T-Notes Tight With Cash Closes, COVID Does Little For Aussie Bonds

T-Notes sticking to a narrow 0-03 range in Asia-Pac hours, -0-02+ at 134-05+ at typing, operating on very light volume of ~23K. A Japanese holiday (and subsequent closure of cash Tsys during Asia-Pac hours) is limiting broader participation, with a lack of macro news flow also evident.

• In Australia, the daily NSW COVID figures have stolen the headlines, with the state discovering 136 new cases. The situation around SW & W Sydney was described as a "national emergency." Some restrictions will be tightened in a couple of suburbs as a result, with the NSW Premier calling for access to additional Pfizer vaccine doses. The NSW Premier also noted that "there is no doubt that the numbers are not going in the direction we were hoping they would at this stage. It is fairly apparent that we will not be close to zero next Friday." An extension of the lockdown in Sydney was already widely expected. In terms of the exposure of today's new cases, NSW health noted that "53 cases were in isolation throughout their infectious period and 17 cases were in isolation for part of their infectious period. 53 cases were infectious in the community, and the isolation status of 13 cases remains under investigation." The local COVID situation has resulted in at least an 8-week suspension of the Australia-NZ travel bubble. Elsewhere, ACGB Apr '26 supply passed smoothly, with the weighted average yield pricing 0.76bp through prevailing mids at the time of supply (per Yieldbroker). Although the uptick in the cover ratio vs. the prev. auction was largely driven by the smaller notional amount on offer, there was still a modest uptick in the metric when adjusted for auction size. The supportive factors for takedown of ACGB supply are well known (international appeal, abundant liquidity, negative RBA-adjusted supply and the potential for the RBA to walk back its tapering announcement are the dominant ones). Futures hold to narrow ranges, with YM & XM printing 0.5 below their respective settlement levels, while the cash ACGB curve has twist flattened, with 15+-Year paper richening by ~1.5bp on the day. The release of the weekly AOFM issuance schedule was bland.