Bear Flattening, In Sympathy With Tsys

Aussie bond futures sit a touch below late overnight session levels as participants react to Friday’s wider market gyrations and the Fedspeak we have alluded to earlier. Meanwhile, COVID-related headline flow out of China hasn’t driven much in the way of meaningful market reaction.

• That leaves YM -4.5 & XM -3.0, with wider cash ACGB trade seeing 1.5-4.5bp of cheapening as the curve bear flattens, moving in sympathy with the moves observed in the U.S. Tsy space since Friday’s Sydney settlement.
• Bills run 1-6bp cheaper through the reds, bear steepening, given the cheapening in bonds.
• RBA dated OIS pricing is little changed to start the week, with just over 20bp of tightening priced for next month’s meeting, while terminal rate pricing sits just over 3.80%.
• The local docket is empty on Monday, which will leave post-weekend adjustments at the fore, barring anything in the way of meaningful headline flow. Looking ahead, this week’s local docket is headline by RBA Governor Lowe’s Tuesday dinner address on “Price Stability, the Supply Side and Prosperity.”