Away From Lows On Reports Of Potential Ratcheting Up Of Sino-U.S. Tensions

The major Aussie bond futures looked through their respective overnight lows in early Friday trade, before backing away from worst levels as BBG sources noted that “the Biden administration is exploring the possibility of new export controls that would limit China’s access to some of the most powerful emerging computing technologies, according to people familiar with the situation.”

• This leaves YM -6.0 and XM -8.5, after the bear steepening of the U.S. Tsy curve filtered through in post-Sydney trade. Wider cash ACGB trade sees 6-9bp of cheapening, with bear steepening observed there.
• EFPs are steady to a touch wider this morning.
• Bills run 2-8bp cheaper through the reds, with overnight moves in market pricing surrounding the U.S. Fed allowing RBA dated OIS pricing of the terminal cash rate to tick higher to print just above 4.30% this morning.
• A$700mn of ACGB Apr-25 supply and the release of next week’s AOFM issuance slate headline the domestic docket on Friday.