Tsys Off Lows, JGBs Soft, Plenty For ACGBs To Digest

T-Notes have recovered from worst levels of Asia-Pac trade after an early extension through Wednesday's post-FOMC trough, to last trade -0-04 at 131-20, although the contract is nowhere near unwinding anything like the bulk of its post-FOMC losses. There has been nothing in the way of an overt catalyst to trigger the recovery from lows. The major cash Tsy benchmarks are little changed across the curve. Asia-Pac flow was headlined by a 30K screen seller of FFQ1.

• The belly has led the way lower in the cash JGB space (much like what has been witnessed in the remainder of the global core FI markets post-FOMC), with 7s cheapening by ~2.0bp. Futures last -25, adding to the post-FOMC losses witnessed in overnight trade. Local headline flow has been light, with confirmation of the previously outlined speculation re: the evolution of Japan's broader COVID restrictions. PM Suga is set to give an address on COVID matters this evening.
• Aussie bonds have recovered from worst levels of the day alongside U.S. Tsys, but YM & XM still sit 9.0 lower vs. yesterday's settlement levels. A stellar domestic labour market report pushed the space to worst levels of the day after some modest pressure for YM in the wake of RBA Governor Lowe's latest address (the spill over from the FOMC decision and a strong NZ GDP report had applied pressure before then). The labour market report, coupled with no real pushback from RBA Governor Lowe re: market pricing surrounding the chances of the Bank rolling its yield curve control measure to ACGB Nov '24 from ACGB Apr '24, saw multi-month wides in the ACGB Apr '24/Nov '24 yield spread.