At Last, A Bid

YM & XM sit ~3bp shy of their respective session peaks, +18.0 & +15.0, respectively, at typing. This comes after both contracts managed to push through their overnight, post-Fed highs, with a weak start for Chinese tech equities, onshore reaction to the FOMC decision (including an unwind of some of the RBA rate hike premium embedded into markets), profit taking/short squeezing and cross market interest vs. U.S. Tsys were identified as potential drivers of the move.

• A recovery in Chinese tech equities and light pressure in U.S. Tsy futures has allowed the space to move back from richest levels of the session.
• Wider cash ACGB trades sees the 3- to 7-Year sector outperform on the curve.
• The IR strip trades 8-21bp richer on the day through the reds.
• A quick look at the BBG WIRP function points to the IB strip pricing a year-end cash rate of 2.95% vs. a peak of 3.10% observed on Wednesday.
• The RBA overnight cash rate set at 0.31%, up from 0.07% (capturing the rate hike from Tuesday), just above the mid-point of the cash rate target/interest rate paid on surplus E/S balance corridor (which stands at 0.30%).
• Local data saw a wider than expected trade surplus, even with exports missing expectations (imports were in line), while building approvals data was on the soft side vs. expectations. That, as well as softer than expected Chinese Caixin PMI data, had no impact on the space.
• Friday will bring the release of the Bank’s SoMP (although the major tweaks to its economic forecasts have already been flagged) and A$1.0bn of ACGB Nov-27 supply.