JAPAN DATA: Offshore Appetite Remains Strong For Local Bonds

"*NZ'S WILLIS: FUTURE RBNZ POLICY MISTAKES ARE FAR LESS LIKELY
*NZ FINANCE MINISTER NICOLA WILLIS SPEAKS AT NEWS CONFERENCE

"*NZ'S WILLIS: STRONGER GUARDRAILS ARE NOW IN PLACE FOR RBNZ" - BBG" 

"*RBNZ REVIEW URGES PUTTING MORE EMPHASIS ON REAL INTEREST RATE
*NZ RELEASES REVIEW OF MONETARY POLICY RESPONSE TO PANDEMIC" - BBG

US Tsy futures have opened with a modestly firmer bias in early Tuesday dealings. We were last 106-04, +02+, for the TYZ6, with dips under 106 still generating support. Market focus overnight was firmly on oil price shifts/geopolitical hopes. Oil benchmarks fell over 3% driven by hopes that diplomacy on the sidelines of this week's UN summit will result in safer passage of energy shipments from the Middle East. WTI futures are little changed in the first part of trade today. US Tsy benchmark yields were flat to 4.5ps lower in Monday trade, led by the back end. The 10yr ending around 4.95%. Note Japan markets remain out today, returning on Thursday. 

• Overnight, Fed commentary was mixed, with near-term rate hike probabilities virtually unchanged on the day (14bp priced through Oct, 33bp through Dec). St Louis's Musalem, one of the FOMC's most hawkish members, told Reuters that he eyed "further policy restraint"...earlier and incremental policy firming is better and less disruptive than later and larger and potentially more abrupt policy action". More dovishly, Chicago's Goolsbee commented that "I remain relatively optimistic" on getting inflation back to the 2% target.
• One interesting contrast that indicated relative comfort in making further hikes: Musalem suggested that the labor market did not necessarily need to slow in order for inflation to return to target, but Goolsbee warned that monetary tightening "won't be painless".
• The data and Fed speaker schedule gets a little busier Tuesday, with regional Fed activity reports (Richmond, Philly), weekly ADP payrolls, and the US Treasury Market Conference bringing appearances by NY's Williams, SOMA manager Perli, and Gov Jefferson (separately we hear from Richmond's Barkin). Additionally, Treasury sells $69B in 2Y Note at auction.

MNI interviews Bank of Canada Governor in two-part interview on monetary policy, economy  -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com.