Tsys Cheapen, ACGBs Off Highs, JGBs Bid After Long Weekend

A greater sense of stability, which saw the Hang Seng briefly pare all of its early losses at one point, applied some light pressure to the U.S. Tsy space during overnight trade. That left T-Notes -0-04+ at 133-04 ahead of London dealing, while cash Tsys run little changed to 1.5bp cheaper across the curve, with 10s leading the way lower. There wasn't much in the way of notable market flow observed. 20-Year Tsy supply provides the focal point during Tuesday's NY session. Housing starts and building permits data will also cross in NY hours.

• JGBs opened firmer after the long weekend, before ticking away from best levels. The space then saw a fresh, albeit modest bid, aided by domestic equities ticking back towards their intraday lows. Futures last +12, while the belly of the cash JGB curve sits ~1.0bp richer vs. Friday's closing levels. The cover ratio eased at the latest liquidity enhancement auction for off-the-run 1- to 5-Year JGBs, although the metric remained above the 4.00x marker. Elsewhere, the pricing of the spreads moved deeper into negative territory this time out, which is a positive in terms of demand. All in all, the auction was digested smoothly enough.
• Aussie bonds drifted away from best levels after showing higher at the re-open, taking a broader sense of direction from the U.S. Tsy space, although the moves in ACGBs were a little more extreme as participants reacted to the moves witnessed after yesterday's Sydney close and subsequent bounce from lows S&P 500 e-minis. The minutes from the RBA's most recent monetary policy meeting didn't provide much in the way in the way of fresh, material information. YM +1.5 & XM +3.0.