10s Lead Weakness Derived From Global Backdrop

Weakness in UK Gilts and hawkish rhetoric from the North American central banks applied pressure to Aussie bond futures during the overnight session. This leaves YM & XM -8.5 vs. yesterday’s respective settlement levels in early Sydney dealing, with the former testing its overnight base after a recovery from worst levels during the latter rounds of overnight dealing.

• Cash ACGBs run 7-9bp cheaper across the curve, with 10s leading the weakness, as the super-long end proves to be slightly more resilient than the rest of the curve.
• Bills run 4-10bp cheaper through the reds, with the backend of the whites and front end of the reds leading the way lower.
• RBA terminal rate pricing in the OIS strip is little changed at ~3.80%.
• Locally, A$700mn of ACGB Nov-25 supply is due on Friday, along with the release of the AOFM’s weekly issuance slate. We will also get the latest Financial Stability Review from the RBA, with focus likely to fall on any commentary surrounding the domestic housing market/debt serviceability in the rising interest rate environment.