Consolidating

Benchmark bonds run circa 3-5bp cheaper across the wider cash ACGB curve in early Sydney dealing, with bond futures consolidating after their uptick away from their overnight cycle lows, leaving YM -3.5 and XM -4.0, with the YM/XM curve comfortably off of overnight steeps. EFPs are marginally wider on the day. Bills sit a little off of their post-settlement cheaps, running unchanged to -6 through the reds.

• The latest round of weekly ANZ-Roy Morgan consumer confidence data revealed the largest % drop observed since January (with the January tumble driven by the spread of the Omicron COVID variant). The survey collators noted that inflation and the impending spectre of RBA rate hikes provided the most notable headwinds for consumer confidence, with those that are paying off home loans experiencing a much more notable drop in confidence than those that are renting or that have paid off a mortgage. Furthermore, ANZ noted that “this is the lowest level for consumer confidence at the start of a tightening cycle since the inflation targeting regime began in the early 1990s. This may see the RBA tighten more slowly than the market is pricing.”
• Focus remains squarely on the impending RBA decision, with wider headline flow limited at best.