Curve Bear Flattens, Sino-Aussie Relations Headline

Aussie bond futures hover a touch above their respective overnight lows after follow through weakness in U.S. Tsys, Eurozone inflation and continued brisk EGB supply applied pressure to wider core global FI markets during the overnight session.

• YM is -7.0 XM is -6.0, while wider cash ACGBs run 4.5-6.5bp cheaper as the curve bear flattens.
• Bills run +2 to -10, twist steepening, while RBA-dated OIS continues to show ~23bp of tightening for next week’s meeting, alongside a terminal cash rate of just over 4.20%, essentially unchanged to a touch above levels witnessed at yesterday’s close.
• Sino-Aussie relations have been at the fore on the local news front. Australia and China's Foreign Ministers spoke on the sidelines of the G20 in India. China's Foreign Minister Qin Gang stated both countries have resumed diplomatic and economic dialogues and must continue to do so at all levels. Elsewhere, SCMP sources noted that “negotiations are expected to pave the way for an eventual visit to Beijing by Australian trade minister Don Farrell,” although the piece went on to flag some snags, while noting that “some insiders say that the bulk of trade is expected to eventually resume, but a considerable chunk has already been supplanted by other countries.”
• Final services and composite PMI readings from Judo Bank, along with housing finance data, headline the local docket today. We will also get the weekly AOFM issuance slate. Elsewhere, Caixin services & composite PMI data out of China will generate interest.