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Comfortably Firmer But Off Best Levels

AUSSIE BONDS

Aussie bonds have generally tracked moves in U.S. Tsys since the cash open in the latter and operate shy of best levels as we move into the last hour of Sydney trade, albeit comfortably firmer on the day, with YM +8.0 & XM +13.5. Wider cash ACGBs run 8-14bp richer across the curve, with the early bull flattening move intact. Outside of the international drivers it is worth noting that strong demand at the latest ACGB Nov-26 auction, a softening in the rate of inflation observed in the Melbourne Institute inflation gauge and the potential trimming of short exposure ahead of tomorrow’s RBA decision has all filtered into price action. Bills sit 1-9bp richer through the reds, with the strip flattening, while RBA dated OIS continues to show a 92% chance of 25bp hike come the end of tomorrow’s meeting, while terminal rate pricing has come in to between 4.15-4.20%.

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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