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Front End Leads The Bid


Pullback In TY Skew Seen During Recent Bid

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AUSSIE BONDS: 3- & 10-Year futures trade 1 tick back from lows after the
contracts followed Tsys lower in early dealing.
- The space had little reaction to comments from RBA Gov. Lowe, made during
SYCOM hours, as he noted that the RBA is "starting to get concerned about credit
supply." While he also suggested that unemployment may go to 4.5% without
generating wage pressure. It's currently 5.0% & the RBA is projecting 4.75%
during '20. This came after the initial speech, which saw Lowe state that "the
Board does not see a strong case for a near-term change in interest rates. There
is a reasonable probability that the current setting of monetary policy will be
maintained for a while yet."
- The 3-/10-Year cash yield differential has held above 60bp, with AU paper's
recent underperformance vs. Tsys also holding, AU/U.S. 10-Year yield spread at
~-37.0bp. Bills trade 1 tick higher to 1 tick lower through the whites and reds.
3-Month BBSW set unch. today.
- A softish non-basket bond auction added some modest pressure to the space in
early dealing.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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