Firmer & A Touch Steeper
Early Sydney trade sees Aussie bond futures extend on their overnight bid after U.S. Tsys richened into the NY close, with continued worry re: liquidity matters surrounding a major U.S. cryptocurrency exchange aiding the bid during the latter rounds of NY dealing.
- Meanwhile, cash ACGBS run 4.5-7.0bp richer across the curve, with the front end leading the bid as the curve bear steepens.
- Bills run 1-7bp richer through the reds given the bid in bonds, bull flattening.
- RBA dated OIS has come in a touch, with a terminal cash rate of ~4.00% now priced.
- Inflation expectations data and an appearance before the Senate Economics Legislation Committee from RBA Deputy Governor Bullock & Assistant Governor (Financial Markets) Kent headline the domestic docket on Thursday.
- A reminder that late on Wednesday we saw Bullock note that there are good reasons to believe Australia is "approaching the peak of inflation this cycle," although she signalled further interest rate increases were likely. Bullock also noted that the Bank’s flexible inflation target gave them scope to tighten policy, alongside the ability to soften the impact of such a move on the labour market. In the Q&A Bullock highlighted that the Bank would not hesitate if it needed to deploy a swift round of tightening if realised inflation differs from the RBA’s projected path. All in all, the speech offered little new for markets.