Volume Hampered By Independence Day Holiday

T-Notes stuck to a 0-03 range overnight, with the contract last +0-02+ at 132-24 operating on volume of ~30K lots, with cash markets set to remain closed on Monday owing to the observance of the U.S. Independence Day holiday. The space has looked through the much softer than expected Chinese Caixin Services PMI print, which slowed to a near-neutral 50.3. The text of the release noted that "the recent resurgence of Covid-19 in the Pearl River Delta had a certain impact on the services sector." A positive, albeit negative factor on the headline reading, was that "the gauge for input prices remained in expansionary territory for the 12th month in June, but fell to the lowest point in 9 months."

• JGB futures gave back a portion of their overnight gains during Tokyo dealing, hitting the bell 12 ticks above settlement levels. Cash JGBs saw the major benchmarks out to 20s trade little changed to ~1.0bp richer, while longer dated paper (30s & 40s) saw very modest cheapening (around 0.5bp worth) ahead of tomorrow's 30-Year JGB supply. There has been a lack of meaningful news flow evident since the Tokyo open, with BoJ Governor Kuroda offering little new in his latest address.
• Aussie bond futures continue to hover around overnight closing levels with a lack of notable catalysts evident early this week, while the proximity to tomorrow's RBA decision will be limiting broader market activity/conviction. As a reminder, the local COVID picture in Sydney seemingly improved over the weekend, although today's figures represented a step back from the positive development. YM +1.5, XM +5.0 at typing. Cash ACGBs have bull flattened, playing catch up to the overnight session moves in futures.