The result of Australian federal election removed a key political risk from the regional picture, as the prospect of a hung parliament receded, with Labor set to form the next administration. Broader recovery in market sentiment has sapped strength from core FI space, with U.S. e-mini futures climbing at the start to the new week.
- Selling pressure hits T-Notes, with the risk switch flicked to on. TYM2 changes hands -0-06 at 119-30 as we type, with Eurodollar futures running 0.5-3.0 ticks lower through the reds. Cash Tsy yields trade 2.3-3.0bp higher across the curve, with marginal flattening evident.
- JGB futures are giving away opening gains, JBM2 trades at 149.81 at typing, 3 ticks above previous settlement. The yield curve has flattened in cash Tokyo trade, as the super-long end leads gains.
- In Australia, YM last sits +3.0 & XM +3.5, both creeping lower. Bills last seen unch. to +5 ticks through the reds. Cash ACGB yields sit 1.8-4.3bp lower across a flattened curve. RBA's Kent suggested that models estimate the neutral level of cash rate around 2-3%, but "it's very uncertain, changes over time."