Aussie Bonds Lead Core FI Lower In Recent Trade

Core FI markets leak lower with nothing in the way of meaningful headline flow observed as TYU2 takes out its early session low. The move seems to be driven by weakness in Aussie bonds with YM & XM breaking below their respective overnight session troughs. The early steepening dynamic has held in ACGBs, with next week’s uptick in ACGB issuance in DV01 terms probably feeding into the move at the margin, but we can’t see anything in the way of a clear headline driver that has become evident over the last couple of hours (RBNZ Governor Orr’s hawkish utterances didn’t provide any new information and NZGBs have lagged ACGBs when it comes to this sell off). JGB futures have softened, although the wider JGB curve still remains in bull flattening mode, with the outperformance of the longer end of the JGB curve now more pronounced on a cross-market basis, resulting in speculation re: continued demand from Japanese lifers when it comes to super-long JGBs.