Unwinding Initial Upticks

Core FI futures are backing off earlier highs, unwinding the initial uptick, as participants parse weekend headline flow. The initial uptick may have been driven by a carry-over from Friday's poor session on Wall Street coupled with geopolitical reports surrounding North Korean missile tests/Sino-Australian tensions. However, the announcement of further relaxation of COVID-19 curbs in Beijing and U.S. plans to remove some tariffs to tackle inflation have provided reasons for cautious optimism.

• T-Notes now change hands +0-02 at 118-19+ after topping out at 118-23+. Eurodollars run -0.25 to +0.5 tick through the reds. Cash Tsy yields sit +0.8-1.5bp higher across a slightly steeper curve. The U.S. data docket is virtually non-existent today.
• JGB futures have given away all of their early gains and last trade at 149.71, 15 ticks below previous settlement and 10 ticks shy of session highs. The yield curve has bear steepened at the margin in cash trade.
• In Australia, YM trades -0.5 & XM -1.0, both are back from earlier highs. Bills trade +3 to -1 tick through the reds. Cash ACGB yields last seen unch. to +2.0bp, curve runs steeper. Australia's Melbourne Institute inflation & ANZ job ads as well as an auction for A$300mn of ACGB Jun '51 are due today.