Cheapening Pressure Prevails Despite Strong ACGB Auction, BoJ's Dovish Resolve

Selling pressure spilled over from U.S. Tsys into ACGBs, although a solid ACGB May '32 auction & fallout from the BoJ's policy meeting helped reduce losses for Aussie bonds.

• U.S. Tsys were dumped from the off, correcting Thursday's rally, as upticks in U.S. e-mini futures indicated that the local equity space may get some reprieve. Aussie bonds clung to the coattails of Tsys, trading with a heavier bias through the session.
• A strong auction for A$1.0bn of ACGB May '32 prompted ACGBs to briefly pop higher, as one successful bidder took the whole amount on offer, reducing the price tail to zero. Based on our quick calculations, the last time when a single buyer snapped all of ACGBs on offer was in Sep 2020. Excluding two 2020 sales, when single buyers managed to purchase A$2.0bn of auctioned bonds each time, today's was the largest amount bought by a lone bidder on record.
• ACGBs resumed losses but took another brief breather as the BoJ announced its monetary policy decision, keeping all ultra-loose settings and broader rhetoric unchanged. Resultant bid in JGBs spilled over into the broader core FI space.
• When this is being typed, YM trade -10.5 & XM -13.5, with bills sitting 4-10 ticks lower through the reds. Cash curve runs steeper, with yields last 9.5-16.5bp higher.