Underpinned By Fed-U.S. Tsy Tensions

T-Notes last deal at 138-16+, +0-05 on the day, a little off of best levels, while the cash curve has witnessed modest twist flattening. The impact from the U.S. Tsy's request for the Fed to return unused funds that were provided for support schemes/a push to unwind some of the facilities at least partially moderated, although the contract never got back to unchanged levels vs. settlement. There has been little of any real note on the headline front during Asia-Pac hours, with market flow centring on the downside TY option plays that we flagged earlier.

• Friday provided another narrow session for JGB futures, ahead of a long weekend, with the contract last +5 ticks, alongside some light richening in the cash space. Little of note on the news flow front, with Japanese Chief Cabinet Secretary Kato playing down the need for a COVID-induced state of emergency, at least at present. Elsewhere, we have heard from Finance Minister Aso, who noted that policymakers must stimulate sentiment with fiscal policy.
• Aussie bonds were flatter on the Tsy dynamic, the futures curve is a little off of flattest levels ahead of the close. YM +0.5, XM +2.5. Local preliminary retail sales data was solid, while the AOFM's weekly issuance slate was vanilla after this week's long end syndicated tap.