Softer than expected rates of expansion in both the Eurozone and U.S. flash PMI readings facilitated a bid in Aussie bond futures during the post-Sydney session, with the pullback from best levels mimicking that observed in the U.S. Tsy space after the EGB close.
- That leaves YM +18.5 and XM +19.0 in early Sydney dealing, as local participants facilitate some firming vs. late overnight levels, although the two contracts operate a little shy of their respective overnight highs.
- Meanwhile, the IR strip runs 8-23bp richer through the reds aided by the previously covered moderation in market pricing re: tightening for the major global central banks.
- Looking ahead, the weekly AOFM issuance slate headlines the local docket during the Sydney session, although that should be a relatively tame affair and not present any tangible impact for the space. Later on Friday (21:30 Sydney/12:30 London) we will see RBA Governor Lowe participate in the UBS Panel discussion on “Central Banks and Inflation.”