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Bonds Lower, 3-Year EFPs Wider

AUSSIE BONDS

The Aussie bond space continues to hold weaker on the day, with 3-Year EFPs pushing out to levels not witnessed since the Mar '20 vol. YM -2.5, XM -7.5, with the impetus from U.S. hours spilling over into the local session.

  • While there has been little in the way of overt headline triggers, it is worth flagging the widening in the ACGB Apr '24/Nov '24 yield spread, which has now unwound 2/3rds of the recent 6-7bp of tightening over just 2 sessions, as markets swing back to pricing a lower chance of the RBA extending its yield targeting mechanism out to cover ACGB Nov '24 in July.
  • Red Bill contracts print 2 to 5 ticks softer at typing.
  • There has also been some focus on local mortgage rate dynamics, after local press flagged that NAB cut two of its variable investment home loans by 30bp this morning.
  • Sino-Aussie tensions remain evident, with recent headlines noting Australia's request re: the formation of a panel at the WTO re: Chinese barley duties.
  • The pricing side of the latest round of ACGB Apr '27 supply was firm enough, with the weighted average yield printing 0.94bp through prevailing mids at the time of supply (per Yieldbroker pricing), although the cover ratio wasn't anywhere near as firm, printing just above 2.00x. Participants were perhaps a little wary in the wake of the recent richening and may have one eye on the RBA's July's decision, which may have kept overall bidding subdued (also resulting in a slightly wider high to average yield differential this time out). Finally, the AOFM released its weekly issuance slate, which is a little light on duration.
  • Next week's local docket will be headlined by the latest RBA decision (Tuesday) & the Q1 GDP reading (Wednesday).
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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