Building On Early Gains

Aussie bonds have richened throughout the Sydney session, hitting fresh session highs on the release of German regional NRW CPI, with tailwinds from a slowing in the M/M print adding to the earlier bullish impetus derived from a recovery in wider core global FI markets from Monday’s lows.

• Cash ACGBs run 4.5-9.0bp richer across the curve, bull steepening.
• YM is +9.5 and XM is +4.5, with both contracts operating just shy of session highs. The 3-/10-Year EFP box is steeper, with 3-Year EFP a little narrower and 10-Year EFP little changed, while Bills run 2 to 11 ticks richer through the reds.
• ACGBs were little changed on a large miss in headline building approvals data for July (-17.2% M/M vs. BBG median -3.0%), likely as the decline was driven by a plunge in the historically volatile large apartment dwellings component.
• Wednesday will see A$1.0bn of ACGB Nov-32 on offer at auction, followed by the release of Jul private sector credit and Q2 construction work.