ACGBs Under Light Pressure With RBA Expected To Hike

The space has struggled for any clear general direction as headline flow remains sparse ahead of the RBA's monetary policy decision. Aussie bonds have slipped as we await the outcome of the RBA meeting.

• Cash ACGBs sold off in reaction to overnight weakness in U.S. Tsys, extending losses after the Sydney re-open. Yield last sit 3.7-6.0bp higher, curve runs slightly flatter. Aussie bond futures have come under mild pressure from the off. YM last trades -5.5, with XM -3.5, both near session lows. Bills trade 3-13 ticks lower through the reds. The RBA is widely expected to raise the cash rate target today. Meeting-dated OIS points to ~28bp worth of hikes priced for today's meeting. Majority of economists surveyed by Bloomberg call for a 25bp hike today, with 11 expecting a 40bp rate rise and 3 forecasting a 50bp move.
• T-Notes rangebound, sticking to a 0-03 range so far. TYU2 last unch. at 117-29+, with Eurodollars little changed on the day. Cash Tsy curve has been subject to some light flattening impetus, with yields last +0.8bp to -0.4bp. Monthly trade balance & 3-Year debt supply will take focus in NY hours.
• JGB futures last seen at 149.57, 13 ticks below previous settlement. Cash curve has steepened at the margin as the super-long end outperforms ahead of today's 30-Year JGB auction. Local data failed to move the needle for JGBs, as earnings growth topped forecasts but the contraction in spending proved deeper than expected. Worth noting that the BoJ will hold its semi-annual meeting with JGB market participants today.