Core FI Ebb Off Session Highs, But RBA Chatter Keeps ACGBs Afloat

ACGBs extended gains to fresh session highs after Westpac revised their RBA call and said they now expect the Reserve Bank to extend its QE programme by a further A$100bn in mid-Oct rather than by A$50bn. Core FI crept higher before the release of Westpac's research note, which provided a shot in the arm for ACGBs. XM pulled back from highs but held onto the bulk of earlier gains and last trades +2.0 ticks, with YM last seen -0.5. Cash ACGB yields trade lower across the curve, with belly outperforming as 10s lead the way. Bills trade unch. to -1 tick through the reds. The AOFM tapped ACGB 0.25% 21 Nov '24, amid speculation that this bond might be included in the RBA's YCC purchases. The A$800mn auction was small by historical standards and saw a tighter price tail vs. the previous auction & a slightly smaller bid/to cover ratio, which nonetheless held above 4.00x. Elsewhere, the AOFM released a relatively light issuance slate for next week. Across the Tasman, the RBNZ trimmed its LSAP purchase target for next week, which was expected after NZ Tsy said it will reduce bond issuance in Apr.

• U.S. Tsys were capped after U.S. Pres Biden doubled his Covid-19 vaccination target & the Fed signalled imminent termination of dividend curbs for banks. T-Notes popped higher to the session high of 132-04 in early Tokyo trade as reaction bid in ACGBs spilled over. The contract ebbed off best levels as broader sentiment remained positive, before posting another uptick with little in the way of headline catalysts crossing the wires. T-Notes last trade -0-02+ at 132-02. Cash Tsy yields sit a touch lower across the curve, with the 5-7 Year sector outperforming despite yesterday's weak 7-Year Note sale. Eurodollar futures last sit +0.5 to -0.5 tick through the reds. Focus in the U.S. turns to personal income/spending & PCE data.
• Despite a softer re-open, JGB futures rallied through Thursday's peak before the Tokyo lunch break, printing their session high of 151.41 as the BoJ left the sizes of its 1-3 & 5-10 Year JGBs unch. Futures trimmed gains thereafter and last sit at 151.37, +3 tick vs. settlement. Cash JGB yields sit lower across the curve, with 2s outperforming. Tokyo CPI, a bellwether of national inflation, showed a marginal slowdown in headline & core deflation in March.