Curve Twist Flattens, After Downtick From Early Highs

YM finished -2.0, with XM +0.5 at the bell, as the wider ACGB curve twist flattened, with a pivot around 10s.

• It seemed that the ACGB space struggled on the back of spill over from (limited) weakness in different bond markets during Wednesday’s Sydney session, which manifested into some ACGB underperformance on the day.
• Some trans-Tasman weakness, linked to NZGB supply, provided weakness in the early rounds of Sydney dealing, with a subsequent post-syndication rally in NZGBs doing little for the space.
• This saw ACGBs pull away from early session highs linked to overnight session moves in futures/Monday’s light post-Sydney bid in U.S. Tsys.
• Some modest cheapening in U.S. Tsys then applied some light pressure.
• In local news, RBA communique included the minutes from the latest monetary policy meeting, which failed to provide anything fresh and meaningful owing to post-meeting appearances from Governor Lowe & Deputy Governor Bullock.
• We also got the Bank’s review of its forward guidance scheme, which pointed to a preference towards a more qualitative brand of forward guidance, when appropriate, in the RBA’s future.
• Bills were -2 to +1 through the reds, twist flattening.
• Wednesday’s docket will see the release of Q3 WPI data, the Westpac leading index & A$900mn of ACGB Nov-33 supply.