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Treasury market had little trouble taking down today’s +3Bil 2yr and 5yr auctions as the market rallied 8.5-9.5 bps across the curve. Today’s 2yr auction tailed .8bps (with little setup) but the market rallied immediately after even with the higher dealer takedown (18.8% vs 14.7% avg of the last 5 auctions). 5s stopped .5 thru the 1pm level with Dealers also taking more (16.8% vs 14% avg of last 5 auctions) which is expected with the increased auction amounts, but the lack of setup and persistent bid into the close had many confused.  The Market remains range bound, market expects the 4.65/4.35% range on 10s to remain until market sees more Tier 1 data (Core PCE on Thursday). Today market saw HFs buying 3s, 5s and 7s, and RM buying 2s and 3s.

In China IG, quiet session in terms of spread move. But flow has still tilted to be better buying. The close to year end grind still going on. Market got lifted some STANLNs in the afternoon. Hon Hai will spend TWD50b to build plants in India, the company says in an exchange filing. PBOC asks banks to increase credit support to POE and encourage allocation to POE bonds. 

In China HY, property stocks consolidating today with SUNAC's term amendments dragging comps lower alongside VNKRLE downgrade, overall flows are controlled, with bulk of the action in VNKRLE post downgrade, this is comprised of RM sellers but not in meaningful size. The rest of the space is marked lower in sympathy with little firm trades to note, on our end lower cash performing lines were actually net lifted into the move. Macau saw two-way flows, and market expects activity to remain at a low with US interest low late last week due to Thanks giving, still seeing some top up trades on the front end and extension trades along the curve, leaves the space generally unch with some technical lines, higher/lower. New World stocks also on a downtrend post ex-div date, flows are little changed though with profit taking flows post tender announcement still the trend, market has stabilized at these levels as most holders rather tender lines with live bids 2-4pts lower than tender levels. China Industrials saw some scrappy flows - ETFs are buyers in small while HF/RMs have some lines to clean up into year end, trading +/- 0.5pt.

In Sovereigns, INDON/PHIL marked unchanged to 0.25pt lower. Two-way traded on INDON with some supply in the 15-20y bonds while better buying in the long-end of the curve. ETFs have been buyers as well. Spreads making new tights and not much resistance to this move as supply remains elusive. In frontiers, SRILAN and MONGOL marked unchanged on the day with some scrappy demand on both.

In SEA IG, starting the week with light flows with tone still fairly constructive in my space although sellers emerged in the afternoon. In Malay RM buying in KNBZMK and some scrappy PETMK long end selling overnight vs ETF buying today, +/- 1bp. India continued demand from PB although better selling in 10yr paper across EXIMBK/BHARTI and Thai had selling of BBLTB new issues today.

In HY, levels unchanged to 0.25pt lower with RM two-ways vs HF trimming. Treasury drift lower 5/10y ~ -0.1-0.2pt while CDX flat. Vedln 24s +0.25pt while rest unchanged. Adani unchanged to -0.25pt. some selling interest on ADANEM 30  ADSEZ 4 27 and buying interest on ADANIG 24 & two-way ADTIN 26. India renewables unchanged with HBSPIN 31 traded two-ways with buyers ACMSOL 26 & CLRNPW 26. India HY corporates traded unchanged to -0.25pt. Some SHFLIN 24 inventory surfaced. JSTLIN 32s hovered around 80.75/81.75 (-0.25pts).

AT1s closed the day about 5c lower, with some selling interest from investors on recent new deals and recent outperformers. Volumes were muted in the morning but picked up in the afternoon with selling mostly coming from the US. No signs of any more supply in AT1. Activity mainly in SOCGEN, BNP, ACAFP, UBS, HSBC, STANLN, SHBASS, SWEDA, DB, STANLN, BNS, INTNED, NWG and BACR.