Dragged Lower By Broader Weakness And Semi-Issuance Pricing

The wider weakness observed in core global FI futures allowed the major Aussie bond futures to extend through their respective overnight bases during Tuesday’s Sydney session, with hedging around the pricing of TCV’s new Sep-36 benchmark bond also applying some pressure late in the day.

• That leaves YM -9.0 and XM -15.0 into the bell, operating just above worst levels, as U.S. Tsys nudge away from session cheaps.
• Wider cash ACGB trade has seen the major benchmarks cheapen by 9-16bp, with the curve bear steepening as super-long paper leads the way lower.
• Bills sit flat to 10bp cheaper on the day, with RBA dated OIS now pricing a terminal rate of just under 4.0%, ~7bp or so higher on the day.
• Local data saw a firming of NAB business conditions, a moderation in business confidence (to around long-run average levels), a modest downtick in Westpac consumer confidence (albeit with very split directions in the reading, intra-month) and a sight slowing of CBA household spending in Y/Y terms (with a negative M/M print seen).
• An address from RBA Assistant Governor (Economic) Ellis on “The Neutral Rate: The Pole-star Casts Faint Light,” headlines the domestic docket on Wednesday. Elsewhere, A$800mn of ACGB Nov-32 supply is due.