Tight Ranges In Asia, Solid 20-Year JGB Auction Seen

A 0-03+ range in play for T-Notes thus far, with the contract last +0-01 at 133-21, while cash Tsys are flat to 1.0bp richer across the curve. Broader news headlines remain on the light side. Looking to the short end, a 5.0K block seller of the EDZ2/Z4 spread dominated on the flow side. Thursday will be headlined by pre-Jackson Hole Fedspeak, with George, Bullard & Kaplan all due to make addresses on CNBC/BBG. Elsewhere, the 2nd Q2 GDP estimate, weekly jobless claims, Kansas City m'fing data and 7-Year supply will be eyed.

• A well-received round of 20-Year JGB supply was seen, as the low price topped the broader expectations, while the price tail narrowed vs. the previous auction as the cover ratio ticked higher. 20s firmed in the wake of supply, with futures moving to the best levels of Tokyo trade, although the latter still prints below yesterday's settlement level, last -4. 30+-Year paper outperforms on the curve, richening by ~1.5bp on the day, with the space generally better bid post-supply. Meanwhile, 7s provided the weak point on the curve for the duration of the session (last 0.5bp cheaper on the day) given the overnight weakness in futures.
• Over in Sydney YM & XM both print 2.0 below settlement levels, with the contracts holding to narrow ranges. Cash ACGB trade saw the 5- to 15-Year sector lead the cheapening. The daily NSW COVID update saw new COVID cases top 1,000 for the first time, although the bond market looked through the headlines, with policymakers now having pivoted the focus of their recent comments to vaccinations and severe cases/hospitalisations. Nonetheless, the broader regional NSW area has extended the period that it will observe lockdown through September 10. Elsewhere, the NSW Premier noted that NSW households with fully vaccinated adults will start to enjoy slightly looser restrictions from mid-Sep, although situations inside and outside of "areas of concern" are slightly different. The Premier also asked the community & businesses to prepare for a wider opening up when NSW hits the 70% double dose vaccination threshold with regards to the eligible population, which she says could come in mid-October. On the data front both headline CapEx and firms' expectations for CapEx for the current FY topped exp., with the latter marked higher vs. the prev. estimate.