All Eyes On RBA

Early volatility in ACGBs has drawn attention to that space, with the yield curve undergoing some fairly aggressive flattening driven by the shorter end. The move seems linked to bets surrounding the potential for the RBA to step in and enforce its 3-year yield target through ACGB Apr '24 purchases.

• The Reserve Bank refrained from intervening over the last two days, despite a sharp rally in shorter-end yields following the release of Australia's latest CPI report, which showed a solid beat in the RBA's preferred metric of core CPI. However, they stepped in and bought A$1.0bn of ACGB Apr '24 in an unscheduled operation last Friday. Should they offer to buy the securities again, the announcement would be made at 01:15BST/11:15AEDT.
• Benchmark 3-year yield sits -12.5bp as we type, retracing some of its recent surge, with the longer-end up a tad. Yield on Apr '24 has fallen 12bp to 0.413%, the Reserve Bank's target is 0.1%.
• YM has crept higher in early trade, last sits +11.0 ticks; XM trades -4.0 ticks at typing. YMXM is up 14.5 at 68.50.
• Bills trade 4-18 ticks higher through the reds.
• Just worth noting that the AOFM will auction A$1.0bn of ACGB Nov '32 at the top of the hour. The weekly issuance scheduled is due for release an hour later.