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A Touch Richer On Wider Impetus

AUSSIE BONDS

A move away from lows in U.S. Tsys and oil more than unwinding its early uptick supported ACGBs ahead of the close, allowing them to overturn their overnight/early Sydney cheapening.

  • That left YM +2.0 & XM +2.5bp at the bell, after overnight session lows were respected on tests by both contracts. Cash ACGBs were 1.5-3.0bp richer, with the long end leading the bid.
  • EFPs were essentially unchanged on the day.
  • Bills finished 2-5bp richer through the reds, tracking gyrations in bonds, while RBA-dated OIS saw a steady 23-24bp of tightening priced into next month’s meeting, as terminal cash rate pricing edged back below 3.80% after showing above the level.
  • Also note that S&P’s affirmation of Australia’s AAA rating, with a stable outlook, would not have harmed the (modest) rally.
  • ACGB May-41 supply passed smoothly.
  • Deutsche Bank updated their RBA call. They now look for a terminal cash rate of 4.10% by August, pointing to Q4 CPI and an apparent resilience in household spending as the primary drivers for the view change. Deutsche previously had a terminal rate of 3.35% pencilled in (which they expected to be registered next month).
  • Looking ahead, private sector credit and retail sales data headline the domestic docket on Tuesday.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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