Cheaper, But Off Lows On Tsy Bid

The bid in U.S. Tsys allowed Aussie bonds to stabilise after an early extension lower, with a lack of idiosyncratic drivers evident on Tuesday. The space has since pulled away from best levels

• That leaves YM & XM a little above their respective session bases, -3.0 & -9.0, respectively, although the recent break lower has allowed bears to switch their technical focus to the June lows in the respective contracts.
• 3-Year ACGB yields printed fresh cycle highs in early Sydney trade, but failed to follow through in a meaningful manner, with the aforementioned bid in Tsys lending some support after local participants adjusted to Monday’s moves in wider core global FI markets and post-Sydney moves in bond futures. Cah ACGBs run 2-9bp cheaper across the curve, with 10s providing the weakest point.
• Bills run flat to -7 through the reds.
• EFPs have seen a similar move to yesterday, with payside hedging flows likely pushing 3-Year EFP wider, while 10-Year EFP is essentially unchanged, flattening the 3-/10-Year EFP box.
• Looking ahead, retail sales data headlines the domestic docket on Wednesday, with A$800mn of ACGB Nov-33 supply also due.