Curve Flatter, Swaps Wider, IRH1 Looks Above 100.00

Swaps have widened vs. the ACGB space on the back of the RBA decision, with the more aggressive than consensus 5-10 Year bond purchase horizon (6 months vs. 12), alongside an in line with consensus purchase war chest of A$100bn, forward guidance tweak pointing to lower for longer settings at the RBA and openness to doing more, if required, at the fore. This saw the space flatten, with YM +2.0 and XM +6.5 at typing, as the latter sits a touch off the reaction highs. Bills have also firmed and now sit 2-4 ticks higher through the reds. The IRH1 contract printed as high as 100.01, i.e. in negative BBSW territory. This was aided by the interest rate being paid on E/S surplus balances lodged at the RBA being set at 0.00% (given the recent relationship between this rate and BBSW fixings), which only a few pointed to as their base case ahead of the decision. A reminder that RBA Assistant Governor Kent recently noted that it wouldn't be surprising to sit the BBSW fixing slip into negative territory.