Cheapening Evident On Monday, Global & Domestic Factors At Work

The impetus from hawkish Fedspeak and a meaningful round of support for the Chinese property sector biased ACGBs lower from the off on Monday.

• The launch and subsequent pricing of A$1.7bn of the new NSWTC Fed-35 bond then provided a local source of weight for the space.
• There wasn’t much else to go off in terms of domestic headline flow, which left the major cash ACGBS running 9-11bp cheaper at the bell, with the intermediate area of the curve leading the way lower. YM & XM hovered at/just above their respective session bases at the close, finishing 10.0 & 11.0 lower on the day, respectively.
• EFPs were marginally narrower on the day.
• Bills were 1-12bp cheaper through the reds, bear steepening.
• RBA dated OIS ticked higher on the day, with a terminal cash rate pricing of ~3.90% observed come the bell (10bp or so higher vs. Friday).
• Looking ahead, Tuesday’s domestic docket includes the release of the minutes from the latest RBA monetary policy meeting, with the Bank’s review of its forward guidance scheme set to cross at the same time.