Firmer, But Off Post-Powell Peaks

Aussie bonds firmed on Thursday, but backed away from best levels. This left YM +7.0 & XM +5.0 at the close, while cash ACGBs were 1-7bp richer as the curve bull steepened.

• Aussie 10s widened a little vs. their U.S. counterpart post-Powell (~7bp vs. yesterday’s local close), with the AU/U.S. 10-Year yield spread operating comfortably within the recently observed range.
• Local data didn’t have any meaningful impact on the space, with the late NY rally in U.S. Tsys (on the back of Fed Chair Powell’s address and month-end index extensions) initially allowing participants to extend the overnight uptick in Aussie Bond futures, before a pull back from best levels, alongside a similar move in the U.S. Tsy space.
• Bills finished 3-6bp richer through the reds, with some light bull flattening apparent.
• RBA dated OIS generally came in a touch post-Fed Chair Powell, with ~”19bp of tightening priced for next week’s decision and a terminal cash rate of ~3.70% observed on the strip.
• Housing finance data, A$600mn of ACGB Sep-26 supply and the release of the weekly AOFM issuance slate headline the domestic docket on Friday.