Curve Bear Flattens

The curve has bear flattened since yesterday’s Sydney close, this came as the U.S. Tsy curve was subjected to some twist flattening pressure. Local news flow has been relatively limited since Thursday’s Sydney close, which has left wider price action and macro headline flow at the fore.

• The underperformance in the front end of the curve may have been driven by some spillover from apparent funding pressures in the U.S., with EDH2 coming under heavy pressure on the day, allowing U.S. FRA/OIS to experience some notable widening.
• YM operates a touch above overnight lows as a result, last dealing -5.5, while XM is closer to the middle of its overnight range, last dealing -2.0. The contracts have moved back from their overnight highs, with some positives re: the Russia-Ukraine conflict evident e.g. a third round of delegate discussions being scheduled for next week, alongside provisions for the evacuation of civilians, which could be facilitated by a temporary ceasefire.
• The IR strip trades 4-9 ticks lower through the reds, with the backend of the whites/front end of the reds leading the way lower.
• Looking to the local docket, A$1.0bn of ACGB Jun-31 supply and the release of the weekly AOFM issuance slate will dominate on Friday.