Unwinding Some Of Asia/Early London Bid

Core global FI markets reverse some of their Asia/early London gains, with no real headline flow to drive the move off bests.

• Weakness in U.S. & European equity futures may have helped the space base in recent trade.
• The Asia-Pac bid was seemingly linked to a combination of Nikkei 225 & USD weakness. The latter came on latest thinly veiled FX intervention threats out of Japan, although that isn’t a U.S. Tsy positive from a flow perspective. Cash Tsys flat to 2.5bp richer, intermediates outperform. TYZ3 +0-05, mid-range after a push above pre-ISM services levels.
• Bund futures last +25, with German cash benchmarks 1-2bp richer.
• Gilt futures haven’t closed the opening gap higher, last +45, while UK cash benchmarks are 2bp richer to 0.5bp cheaper as the curve twist steepens.
• Early support for Gilts came from another downtick in BoE-dated OIS, as the recent dovish repricing extended. That move is now off extremes. Underperformance was noted in the long end from the off, with news the DMO is considering holding a tender for a 40+-Year gilt on 27 September a potential driver (that wasn’t a complete surprise given DMO guidance alongside the latest quarterly issuance calendar release).