ACGBs Bid After Westpac Forecasts RBA Rate Cuts In Oct

Aussie bonds surged as Westpac updated their RBA easing call and said they now expect 65 Martyn place to cut the cash rate, 3-year yield target and TFF rate to 0.10% from 0.25%, adding that Australia's central bank "is likely to extend its objectives for bond purchases to include general support for the Australian and semi government yield curves in the five to ten year maturity range". The new Westpac forecast came after NAB said yesterday that they expect interest rate cuts from the RBA in Oct or Nov. The publication of Westpac's piece boosted market pricing of an Oct rate cut and fully alleviated initial mild pressure on ACGBs, linked to the awaited syndication of ACGB Sep '26. It came to fruition as we were nearing the end of play, lending some modest support to the space as the AOFM sold A$25bn worth of the new bond in a record sale. Aussie bond futures remain elevated as we type; YM sits +5.5 & XM +4.0, both off post-Westpac highs. Cash ACGB yields trade lower, with the 3-5 Year sector outperforming amid talk of potential RBA buying further out along the curve. 3-Year yield printed its all-time low before edging away from there. Bills trade 1-3 ticks higher through the reds. Aforementioned dynamics overshadowed a 4.2% M/M drop in Australian retail sales, revealed by preliminary data for Aug.

• Japan returned from holidays to witness a decent rally in JGB futures, which last trade at 152.22, 14 ticks above settlement & near session highs. Cash JGB yields trade lower, curve runs steeper. Flash Jibun Bank PMIs out of Japan remained in contraction, showing little deviation from the previous readings. Little of note seen in BoJ Kuroda's commens after his meeting with the new PM Suga.
• T-Notes wavered within a 0-03 range and last trade -0-02+ at 139-17+, with focus fixed on the latest portion of Fedspeak and the news that the Democrats have reached agreement with the GOP & White House over a stopgap funding bill. Cash Tsy yields generally sit marginally lower across the curve. Eurodollars last seen +1.0 to -0.5 tick through the reds. Domestic PMI data & a flurry of Fedspeak take focus today.