U.S/ Tsy Futures Nudge Lower Overnight, Aussie Bonds Flatten

Tsy futures traded lower in Asia-Pac hours as the region reacted to a more hawkish than expected FOMC dot plot, while the market seems less worried re: Evergrande contagion. T-Notes last +0-01 at 133-00+, after a round of screen selling helped the contract lower overnight. Cash Tsys are closed until London hours owing to a Japanese holiday. Short end flow was headline by a 5.0K screen seller of EDZ2.

• Early Sydney trade saw Aussie Bond market participants react to the post-FOMC flattening impetus provided by U.S. Tsys, supporting XM. Local news flow saw the state of Victoria record a fresh high in terms of new daily COVID cases detected in the state of Victoria (766), although those headlines hit after the bid, and COVID case counts haven't impacted the space for some time given policymakers' focus on the vaccination drive and living with COVID. The space then moved away from best levels of the day alongside U.S. Tsys, leaving YM -2.0 and XM +1.0 at typing, while the longer end of the cash ACGB curve has richened by ~2bp.