Demand Evident After Sell Off

Outright yield appeal and RBA Governor Lowe sticking to the central theme of a willingness to be patient when it comes to rate hikes, reinforcing data-dependent/evidence-based monetary policy, intertwined with the RBA’s relatively sanguine views re: domestic inflation pressures, have supported the space during the final Sydney trading session of the week, allowing futures to move away from the U.S. PCI/Fed-induced pressure. YM -10.0 & XM -6.5 at typing.

• Lowe played down the potential re: hiking rates on the back of 1 more CPI print, although he did intimate that a move could take place after 2 further CPI readings (seemingly pushing back against market pricing of rathe hikes, while being a little more sympathetic of the sell-side consensus, which looks for an August hike).
• Note that RBA will continue to offer ACGB A$2.5bn of coupon bearing conventional ACGB issuance next week (even with the withdrawal of RBA purchases), while T-Note issuance for next week was reduced by A$500mn vs. this week.