Early Gains Pared, ACGB Nov-32 Sale Causes Little Reaction

ACGBs pulled back from highs, losing ground alongside U.S. Tsys as the session progressed. The sale of ACGB Nov-32 came and went, while the release of the AOFM's weekly issuance slate coincided with a brief bout of increased volatility.

• The auction of a Nov' 32 note drew a bid/cover ratio of 2.38x, down from 3.19x at the previous offering, while the tail widened. The yield on that tenor in secondary market sits at 1.42%, with little in the way of reaction to the auction today.
• The AOFM outlined its plans to hold just one bond auction next week, offering A$800mn of ACGB Nov-28 next Wednesday. It also outlined plans to issue a new May-34 Bond via syndication in the week beginning Nov 7.
• Local data were shrugged off, with PPI inflation quickening to +6.4% Y/Y in Q3 from +5.6% prior. This comes after an expectation-busting CPI report published earlier this week.
• Benchmark futures contracts have virtually unwound early gains, with YM last +8.0 & XM +6.0 as YMXM sits +1.5. Bills run 3-10 ticks higher through the reds.
• ACGB curve still runs slightly steeper, with yields last 7.0-5.2bp lower. 3-Year/10-Year differential has tightened at the margin.
• Swaps still fully price a 25bp rate hike from the RBA at next week's Board meeting.