Cheaper On Core Global FI Moves; Gov. Lowe To Testify On Friday

ACGBs sit a little off session cheaps at typing, with a continued downtick in U.S. Tsys & JGBs helping to unwind the twist flattening observed in futures overnight, which spilled over into early Sydney trade.

• Cash ACGBs run 1.5-6.5bp cheaper across the curve, bear flattening. YM is -6.8 and XM is -2.6, with both contracts keeping within their overnight boundaries. Bills run 4 to 8 ticks richer through the reds.
• Aussie bonds saw little by way of a meaningful, lasting reaction to the release of domestic labour market data, with the modest miss in headline employment gains and uptick in unemployment not expected to move the needle re: the RBA’s policy decision in Oct, at least in isolation.
• STIR markets now price in ~39bp of tightening for the RBA’s Oct ‘22 meeting, little changed from levels observed prior to today’s labour market data, consolidating the recent move higher which came on the U.S. CPI print and the subsequent repricing of market expectations re: Fed tightening.
• Friday will see RBA Governor Lowe appear in Parliament for his semi-annual testimony. Following that, A$800mn of ACGB May-32 will be on offer at auction, with the AOFM’s weekly issuance slate due as well.