The combination of stronger than.......>

BOND SUMMARY: The combination of stronger than expected Chinese Caixin PMI data

coupled with the latest adjustment to the BoJ's JGB buying allowed T-Notes to

unwind their early, trade-war/Hong Kong inspired gains, with cash markets closed

for the Labour Day holiday. T-Notes last unch. at 131-23, at lows as we head

into European hours. Eurodollar futures 0.75-1.5 tick higher through the reds.

- The BoJ's decision to cut the size of its 10-25 Year JGB purchases caught most

unawares, after the Bank cut the size of its 5-10 Year purchases on Friday (it

also adjusted the upper & lower bounds of its 5-10 Year purchase sizes in its

September Rinban outline, released after market on Friday), reaffirming the

BoJ's desire for a steeper yield curve. The move sent JGB futures to session

lows in limited trade, with the contract last 8 ticks worse off on the day. The

10-25 Year underperformed on the curve, with yields little changed elsewhere.

- Aussie bond futures have pulled back from their early best levels, on the back

of the aforementioned dynamics. Local data was mixed, and PM Scott Morrison

noted that he expects the Q2 GDP print to be "soft." YM last -2.0, XM -3.5.

Bills trade unch. to 3 ticks lower.