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BONDS: ACGB Curve Bear-Steepens, Tracking Moves In Tsys

BONDS

Aussie bonds saw a bear-steepening move occur today, largely tracking moves made in US tsys. Earlier today we had a 2028 bond auction, followed by Australia Private sector Credit data which was in line with estimates

  • Australia's credit to business and consumers increased by 0.5% month-on-month in November, meeting expectations, according to the RBA. Year on year, credit rose 6.2%, up from 6.1% in October. Housing loans grew 0.5% m/m and 5.4% y/y, while consumer credit declined 0.2% m/m but rose 2.1% y/y. Lending to non-financial businesses increased 0.7% m/m and 8.5% y/y.
  • There was a 2028 bond action today, the notes drew an average yield that was 1.4bps lower than the mid-rate in the secondary market, signaling strong investor demand
  • US tsys are trading steady ahead of  the release of US core PCE data, after the Fed signaled concern over the risk of inflation pressure facing the economy
  • ACGBs have traded cheaper today, the curve has bear-steepening with the 2s10s +1.5bps at 48bps. The 2yr is trading -0.4bps at 3.978% while the 10yr is +7bps at 4.478% and now trade about 33bps higher than the December lows.
  • ACGB futures are currently YM -0.5, VTA -0.55, XM -0.7
  • Swap curves are trading +1 to +2bps, with the 2y underperforming
  • Bill strip is flat to -6,
  • RBA-dated OIS pricing has firmed 2-10bps throughout the week, with 16bps of cuts priced for Feb, or a 63% chance of a cut, the first full cut is now priced in for the April meeting. However the market further out the curve has cooled, with only 67bps of cumulative cuts now priced by December 2025, down from 80bps to start the week.
  • Next week we have the RBA Minutes of Dec. Policy Meeting due out on December 2024
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Aussie bonds saw a bear-steepening move occur today, largely tracking moves made in US tsys. Earlier today we had a 2028 bond auction, followed by Australia Private sector Credit data which was in line with estimates

  • Australia's credit to business and consumers increased by 0.5% month-on-month in November, meeting expectations, according to the RBA. Year on year, credit rose 6.2%, up from 6.1% in October. Housing loans grew 0.5% m/m and 5.4% y/y, while consumer credit declined 0.2% m/m but rose 2.1% y/y. Lending to non-financial businesses increased 0.7% m/m and 8.5% y/y.
  • There was a 2028 bond action today, the notes drew an average yield that was 1.4bps lower than the mid-rate in the secondary market, signaling strong investor demand
  • US tsys are trading steady ahead of  the release of US core PCE data, after the Fed signaled concern over the risk of inflation pressure facing the economy
  • ACGBs have traded cheaper today, the curve has bear-steepening with the 2s10s +1.5bps at 48bps. The 2yr is trading -0.4bps at 3.978% while the 10yr is +7bps at 4.478% and now trade about 33bps higher than the December lows.
  • ACGB futures are currently YM -0.5, VTA -0.55, XM -0.7
  • Swap curves are trading +1 to +2bps, with the 2y underperforming
  • Bill strip is flat to -6,
  • RBA-dated OIS pricing has firmed 2-10bps throughout the week, with 16bps of cuts priced for Feb, or a 63% chance of a cut, the first full cut is now priced in for the April meeting. However the market further out the curve has cooled, with only 67bps of cumulative cuts now priced by December 2025, down from 80bps to start the week.
  • Next week we have the RBA Minutes of Dec. Policy Meeting due out on December 2024