U.S. Tsy Yields Ease Off Initial Highs, ACGB Yields Slip Ahead Of RBA Rate Decision

Core FI wobbled in the first Asia-Pac session of the week, with participants digesting weekend headline flow. Worrying geopolitical reports (North Korean missile launches, a dangerous incident involving Australian & Chinese aircraft) were weighed against Beijing's decision to ease COVID-19 curbs further and talk of a potential removal of some tariffs by the U.S. in a bid to tackle inflation.

• T-Notes managed to stay afloat, even as their initial uptick proved short-lived. TYU2 rose to 118-23+ in early trade, unwound this move, then gradually regained poise. It last changes hands +0-04 at 118-21+, while Eurodollars run -0.25 to +1.0 tick through the reds. Cash U.S. Tsy yields trade 0.4-0.8bp higher across the curve, off earlier highs.
• JGB futures unwound the initial uptick (with peak at 149.81) and traded sideways thereafter, as the Nikkei 225 recouped opening losses and continued to climb. JBM2 trades at 149.74 at typing, a dozen ticks below previous settlement. Cash JGB yields sit higher across the curves, but off earlier highs. Comments from BoJ Gov Kuroda were shrugged off.
• Australian YM trades +0.5 and XM +1.0, the latter is heading towards its earlier session highs. Bills last seen +4 to -4 ticks through the reds. Cash ACGB curve has bull flattened, with yields last sitting up to 1.8bp lower. The AOFM sold A$300mn of ACGB Jun '51, market reaction was muted. Domestic data also failed to provoke much response. All eyes were already on the RBA, set to deliver its monetary policy decision tomorrow, with hawkish rate hike bets moderating at the margin.