Tsys Firm Ahead Of FOMC, ACGBs Shrug Off RBA Minutes

T-Notes extended yesterday's gains and trade +0-05 at 132-03+ as we type, amid little in the way of headline flow to drive the move. Cash curve bull flattened, though the 7-10 sector outperformed, while 10-year Tsy yield pulled back under 1.600%. Eurodollar futures run -0.5 to +1.0 tick through the reds. U.S. highlights today include industrial output & retail sales data, as well as 20-Year Tsy supply. The Fed is in its blackout period, with all eyes on Wednesday's MonPol decision.

• JGB futures took their cue from T-Notes and crept higher, printing best levels in a week. The contract sits at 151.16, 9 ticks above last settlement. Cash JGB yields trade lower across a slightly flatter curve. Final industrial output figures reported by Japan were revised marginally higher. The MoF conducted a liquidity enhancement auction for off-the-run 5-15.5 Year JGBs, with bid/cover ratio easing to 3.664x from 5.060x seen at the prev. auction. MoF off'ls revealed that there is Y3.8tn left in Japan's Covid-19 reserve fund, while FinMin Aso said that the cabinet has approved cash handouts for low income families. Aso added that the decision on U.S. beef imports has not been taken yet, after local media flagged an imminent tariff hike.
• Aussie bond futures firmed, YM last sits +3.5 & XM +9.4 ticks, in close proximity to session highs. Cash ACGB curve flattened, yields trade +0.1bp to -10.1bp at typing. Bills trade unch. to +3 ticks through the reds. The space showed little reaction to the latest RBA MonPol meeting minutes and local data, which included a beat in Q4 house price index & slight deterioration in the ANZ/Roy Morgan weekly consumer confidence gauge. Following the release of the RBA minutes, CBA said they now see the RBA keeping its YCC policy in place until the maturity of the Apr '24 bonds (without switching to Nov '24), while Westpac confirmed their call that the RBA will extend the YCC to the Nov '24 bond.