Back From Best Levels

Aussie bonds have steadily backed away from best levels as we have worked our way through the Sydney day, mirroring a similar pullback in U.S. Tsys alongside weakness in German Bunds. Cash ACGBs run flat to 6.5bp richer across the curve, bull steepening, with 3s sitting 6bp richer at typing, back from as much as 14bp richer earlier. YM and XM are +8.0 and +4.5, respectively, with the former sliding back below its overnight high. Bills run 8 to 11 ticks richer through the reds, bull flattening. EFPs have narrowed, with a notable steepening of the 3-/10-Year box in play.

• ACGBs were little changed on the domestic retail sales data miss (+0.2% M/M vs. BBG median +0.5%) after quickly reversing an initial blip lower. Elsewhere, Australian Treasurer Chalmers’ state of the economy address did little to rock the Aussie bond space, delivering a cut to GDP growth outlook, while forecasting that inflation will hit 32-year highs at 7.75% by end-22.
• Friday will see Q2 PPI and Jun private sector credit headline the data docket, while A$1.0bn of ACGB Nov-33 will be on offer, followed by the release of the AOFM’s weekly issuance slate