A Little Softer Than Settlement

Curve a touch steeper after Thursday's bull flattening, with the U.S. curve twist steepening on Thursday. The Aussie/U.S. 10-Year yield spread is little changed. YM -0.8, XM -2.8 (quoting the M1 contracts).

• Our latest interview with RBA board member Harper hit during the London morning on Thursday. Harper believes that Australia's recovery is sufficiently strong to "ride through" the end of government jobs subsidies at the end of the month. Asked whether a sustained Australian recovery could drive the local dollar higher if other countries' post-Covid growth surges collapse "souffle"-style, he said growth would tend to feed Australia's demand for imports, eroding its trade surplus and correcting any currency strength. Harper argued that AUD strength is being driven by commodity prices and is "not something the RBA can or should do anything about." Harper was unconcerned about the rapid rise in house prices, saying stronger asset prices "strengthen balance sheets and shore up the financial strength of households and firms. Other things equal, this encourages households to consume and firms to invest, both of which stimulate the pace of economic recovery." All in all, there was little in the way of differentiation from the core view of the RBA board.
• The release of the AOFM's weekly issuance schedule headlines the local docket on Friday.