Tsys Firm In Asia, Underpins Broader Core FI

Regional demand for Tsys remained firm in Asia-Pac hours, with T-Notes last +0-06+ at 138-12+, representing best levels of the session, while cash Tsys bull flatten as 30s richen by ~2.5bp. Upbeat rhetoric from Chinese President Xi re: relationship building among APEC nations has done little to bolster broader risk appetite (Xi also continued to point to a focus on the dual circulation strategy), with Brexit worry and Five Eyes communique re: recent developments in Hong Kong dominating headline flow overnight.

• JGB futures pared their modest overnight losses during the Tokyo morning, with U.S. Tsys trading on the front foot and domestic equities edging lower, although the contract held to a narrow range, and last deals at unchanged levels. The long end of the cash curve has seen some underperformance today, after yesterday's outperformance, cheapening during the Tokyo morning, even with receiving seen in the super-long end of the swap space. Locally, the COVID situation in Tokyo continues to dominate, with a local government briefing on the matter set to be held later today. The has already moved to enact its highest virus alert level.
• The Aussie bond space was seemingly happy to look through the latest local labour market report, with a modest blip lower unwound. YM & XM both sit unchanged, unwinding their overnight losses on the broader cautious tone. The dataset saw a large upswing in the number employed vs. expectations for a dip (+178.8K vs. -27.5K). The upswing in the participation rate (to 65.8% from 64.9%, now only 0.4ppt shy of the 2019 highs) outweighed the move higher in the number employed, with the unemployment rate edging up to 7.0% vs. exp. of 7.1%. Employment gains were pretty well split between full-time (97.0K) and part-time (81.8K). Underemployment and underutilisation both moderated, while the ABS noted that "in seasonally adjusted terms monthly hours worked in all jobs: increased by 20.6 million hours (1.2%) to 1,711 million hours and decreased by 3.4% over the year, which is larger than the 1.0% decrease in employed people."