A Fierce Rally Follows A Fierce Sell Off

Global core fixed income markets recovered some poise during Friday's overnight session as month-end support for the U.S. Tsy space (in the form of slightly larger than average index extensions and rebalancing out of equities into bonds) came to the fore as we moved through the U.S. session, leaving YM +6.0 and XM +24.0 in early trade this week, with the latter trading through its overnight peak as local participants adjust to the overnight moves in early Monday trade.

• 3-Year ACGB yields (measured by ACGB April '24) have consolidated back below 12.0bp after a brief and limited foray above 15.0bp at the tail end of last week, which may alleviate some of the pressure on the RBA ahead of tomorrow's meeting, while reducing the need to act to enforce the Bank's 3-Year yield target on Monday (note that the Bank now holds a little over 60.0% of ACGB April '24).
• A quick look at cross market spreads sees the AU/U.S. 10-Year yield spread comfortably back below the 30bp mark after hovering around the 40bp mark during Friday's Sydney session.
• The local docket is headlined by Q4 inventories & operating profits, ANZ job ads and housing finance data on Monday.