Bond Futures Give Back Post-RBA Gains

YM & XM both print -4.0 at typing. Bond futures have now given back all of their post-RBA bid, which was linked to the lack of evolution in the Bank’s forward guidance. A reminder that the central bank’s underlying inflation projection profile now sits within/above the upper half of its 2-3% target through the end of ’23. Wages remain the missing piece to the puzzle when it comes to cash rate lift-off, with the IB strip only experiencing a modest bid post-RBA, now pricing a 15bp hike at the end of the Bank’s June meeting (a 15bp hike was priced for the May meeting pre-RBA). Ultimately, yesterday’s post-meting meeting statement & the insistence from the central bank that it will be patient when it comes to rate hikes hasn’t meaningfully impacted market pricing (which has long viewed the RBA as being behind the curve).

• Bills run 1-7 ticks lower through the reds as a result, with much of the post-RBA bid also unwound there (the very front contracts have been more reluctant to give back gains, as you would expect).
• The space has looked through the latest NZ employment data.
• In terms of today’s domestic docket, RBA Governor Lowe will speak (01:30 London), with participants and RBA watchers on the lookout for any references to cash rate hike timing (in addition to Q&A surrounding the matter).
• Elsewhere, A$1.0bn of ACGB 1.00% Nov-31 supply is due.