Cheaper On Global Moves, Labour Market Report Eyed

Spill over from the wider core global FI space (a downtick in U.S. Tsys and a heavier move in NZGBs) applied modest pressure to the ACGB space on Wednesday, although Sydney trade was relatively narrow, with the major bond futures contracts sticking within their respective overnight ranges.

• YM prints -4.0 ahead of the bell, with XM -2.5, while wider cash ACGB trade sees 2-6bp of cheapening, as the curve bear flattens
• EFPs are a little wider on the day, with the 3-/10-Year box steepening.
• Bills sit 7-10bp cheaper through the reds, with RBA dated OIS pointing to a terminal rate of just under ~4.10%, 10bp or so higher on the day, but comfortably within the recently observed range.
• ACGB Apr-29 supply was easily digested, while SAFA conducted a A$750mn tap of its May-30 select line.
• It is worth remembering that 21 October represents the joint largest round of ACGB coupon payments of the year (A$4.87bn), with eyes on the potential for coupon cash deployments over the next few sessions of a result.
• Looking ahead, Thursday’s domestic docket is headlined by the release of the monthly labour market report.