Bid In Aussie Bonds Supports U.S. Tsys

With a lack of broader headline developments evident it would seem that spill over from the firming in Aussie bonds, TY flow seeing better buyers in the main & a 10K TUH1 block buy combined to support the U.S. Tsy space in Asia-Pac hours, even with a slight uptick in e-minis evident. We should flag that a 5.0K screen seller of TYH1 did help the space away from best levels, with that contract last +0-02+ at 136-28, within a 0-05 range. The cash curve is a touch flatter, with 30s running a little over 1.0bp richer on the day.

• JGB futures held to a tight range, last -2. Cash trade saw richening across the most of curve, although the belly lagged for a third straight day. In the only real point of note, the BoJ left the purchase sizes of its 5-25 Year Rinban operations unchanged, with offer to cover ratios softening a little
• The lack of an immediate ACGB Nov '32 syndication from the AOFM via today's weekly issuance guidance has supported the longer end of the Aussie bond curve, with speculation surrounding the potential for such an announcement in the AOFM's weekly issuance guidance weighing on the space earlier this week (as we flagged). This leaves the curve flatter, with YM +0.5 and XM +3.0. As mentioned earlier, the SoMP did little to rock the boat, with no gamechangers revealed; underlying inflation is seen below 2% under the central scenario over the forecast horizon and unemployment is expected to tick lower as implied on several occasions earlier this week. Much of the latest RBA appearance in front of the House of Representatives Standing Committee on Economics was dedicated to reaffirming the messaging given earlier in the week, but Governor Lowe did note that the Board hasn't ruled out further bond purchases when its pre-announced scheme runs out of ammo later this year. Elsewhere, Lowe suggested that the Bank's bond buying scheme has lowered longer dated bond yields by ~30bp, while stressing that the Bank has zero appetite re: corporate and bank bond purchases.