Bear Steepening

Aussie bonds are just off session lows, having largely maintained their cheapening bias derived from the moves in core FI markets on Tuesday.

• Cash ACGBs run 3.0-7.0bp cheaper across the curve, with the 10- to 15-Year zone leading the way lower.
• YM is -4.0 and XM is -8.0, just off their respective session lows. EFPs have narrowed a little, while Bills run 1 to 6 ticks cheaper through the reds, bear steepening.
• The solid Q2 GDP print (details fleshed out elsewhere) drew little by way of a meaningful reaction from ACGBs, with yields across the curve largely keeping within established ranges after the data release.
• STIR market pricing re: tightening for the RBA’s Oct meeting currently price in ~34bp of tightening at that meeting, virtually unchanged from prior to the Q2 GDP release.
• The latest round of ACGB Apr-33 supply was absorbed smoothly, with an improvement in cover from the previous auction (4.11x vs. 2.38x prev.) observed amidst the higher yield on offer, with ACGBs operating off of cycle cheaps as well. ACGBs initially recorded fresh session lows post-supply, before quickly erasing the blip lower.
• Thursday will see trade data for July headline the domestic data docket, with a speech from the RBA’s Governor Lowe expected to draw focus following the RBA’s policy decision on Tuesday.