Cheaper, With GDP Providing A Modest Beat

The ACGB space underperformed vs. U.S. Tsys, with the AU/U.S. 10-Year yield spread widening by ~6bp on Wednesday; aided by setup into domestic Q1 GDP, which ultimately topped estimates (+0.8 Q/Q vs. median +0.7%), even after yesterday’s partials data resulted in a mark up of sell-side expectations when it came to the GDP release.

• Still, the sell off observed since Tuesday’s partials data, coupled with the ability of U.S. Tsys to find a bit of a base, meant that the post-data extension lower or Aussie bond futures was limited, leaving both YM & XM -9.5 at typing, at/just above worst levels of the day. Cash ACGB trade sees a relatively parallel cheapening shift across the entire curve.
• A firm ACGB Apr-25 auction saw the weighted average yield price 1.47bp through prevailing mids (per Yieldbroker), while the cover ratio printed comfortably above 3.00x. We would suggest that the carry & roll aspect and potential short covering demand (indicated via RBA SLF demand) that we highlighted in the auction preview were the most prevalent supportive factors for the auction.
• Bills run flat to 11bp cheaper through the reds, with EFPs a touch wider again today, as the 3-/10-Year box. bull flattens once again.
• Monthly trade balance data headlines the domestic docket on Thursday.