Back From Cheapest Levels

ACGBs have recovered from session cheaps, with Cash ACGBs running 2.0-6.5bp cheaper across the curve, bear flattening. YM and XM are -5.5 and -3.0, respectively, after failing to meaningfully break out of their respective overnight ranges (YM did show through overnight lows, XM did not). Another push wider in EFPs suggests that swap flows helped keep the pressure on the space, even as futures moved off worst levels. Bills run 2 to 10 ticks cheaper through the reds, bear steepening.

• When it comes to the move off lows, the Aussie Bond space caught a light bid in tandem with core FI markets on the reported shooting of ex-Japanese PM Abe, with debate re: the impact of the event on Japanese policy continuity taking focus, particularly on issues of Japan’s defence and monetary policy stances.
• The latest round of ACGB Nov-24 supply went smoothly, with the weighted average yield pricing 2.45bp through prevailing mids which the cover ratio (4.6597x) came in above the 4.000x mark. Recent market stabilisation and clear demand for access to the line (as seen from the amount on loan via the RBA’s SLF) was expected to result in a smooth round of digestion for the auction.
• The AOFM issuance slate announced for next week saw little reaction in the ACGB space, with a cumulative A$1.5bn in Bonds A$2.5bn in Notes on offer.
• Looking to next week, the domestic data docket is virtually empty on Monday, with consumer confidence, business conditions, and household spending data expected to provide the first point of interest on Tuesday.