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Curve Bear Flattens, SoMP Digested


Aussie bonds finished off cheapest levels, with YM -8.0 & XM -4.0, while wider cash ACGBs are 4-8bp cheaper as the curve bear flattens.

  • Early Friday trade saw Aussie bond futures pull lower, extending on their overnight weakness, as RBA cash rate pricing extended higher and some pre-RBA SoMP hedging took hold.
  • The space then pulled away from session cheaps, assumingly on the back of the RBA’s SoMP pointing to underlying inflation returning to the upper end of the target band by the end of next year (albeit a product of a mark higher in this year’s forecast points).
  • Softer than expected Chinese PPI data may have also provided some modest support.
  • Bills were 4-10 bp cheaper through the reds, with the backend of the whites leading the weakness. RBA-dated OIS now shows a terminal rate of just under 4.15% after pushing closer to 4.20% earlier in the session.
  • EFPs were little changed on the day.
  • Next week’s domestic data docket sees the release of the monthly labour market report, business and consumer confidence surveys, household spending data from CBA and consumer inflation expectations. We will also hear from RBA Governor Lowe who will appear before the Senate Economics Legislation Committee.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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