Firmer After Two-Way Offshore Cross Currents Drive Activity

Aussie bonds latched on to the wider bid in core global FI markets which came on the back of an FT report which pointed to the likely delay of the BoE’s QT plans, allowing the space to move to best levels of the Sydney session, with YM +9.5 and XM +11.5 ahead of the bell, just off their respective peaks.

• Cash ACGBs run 7-11.5bp richer, with the 10- to 12-year zone outperforming for much of the day.
• EFPs sit wider, albeit off session wides, with the 3-/10-Year box flattening a touch.
• Bills are 2p cheaper to 12bp richer, twist flattening, after bear flattening earlier in the session. RBA dated OIS has seen receive side flow in the wake of the BoE story from the FT, with terminal rate pricing back below 4.00% after showing above 4.10% in the wake of a firmer than expected NZ CPI print earlier in the session.
• The initial impulse from data seen across the ditch weighed on Aussie bonds before the broader core FI bid provided support at different stages of the day.
• An address from RBA Deputy Governor Bullock and the minutes from the October RBA meeting failed to move the needle for markets.
• Looking ahead, the Westpac leading index and A$800mn of ACGB Apr-29 supply are due on Wednesday.