Aussie Yield Curve Bear Steepens After Federal Budget

Cash ACGB yield curve has bear steepened trading resumed in Sydney, digesting impetus from overnight moves in U.S. Tsys & reacting to Australia's FY2021/22 Federal Budget, delivered yesterday evening. The government made bold spending promises and forecast a wider than expected budget deficit of A$106.6bn. The AOFM followed up this morning, noting that 2021/22 debt issuance would total A$130bn (that is slightly more than expected) and revising issuance plan for the remainder of this year to A$210bn (of which $198 billion has been completed). Cash yields trade 0.6-6.8bp higher across the steepened curve as we type, with 10s underperforming. YM trades -1.0, while XM sits -6.0, both holding tight ranges. Bills last trade unch. to -2 ticks through the reds. Worth noting that across the Tasman, NZGBs took a hit on the back of weak pricing seen at the latest round of RBNZ LSAP ops.

• T-Notes have slipped in early trade and last sit -0-01+ at 132-13, as e-minis have inched higher sparking preliminary hopes that the Wall Street rout might be over. Cash Tsy yields sit a touch higher across a marginally steepened curve. Eurodollar futures are mostly unch., last trade +0.5 to -0.5 tick through the reds. April CPI report, 10-Year auction & Fedspeak take focus in the U.S. today.
• JGB futures trade at 151.38, 9 ticks shy of last settlement, consolidating overnight losses. Cash JGB yields are little changed across the curve. There is little of note on the Japanese docket today, with focus already on Thursday's 30-Year debt supply.