Firmer, But Still Comfortably Lower Than Friday’s Settlement Levels

Aussie bond futures are better bid early this week, paying more attention to the negatives surrounding the softer than expected Chinese PMI data released over the weekend, in addition to the previously outlined geopolitical worries surrounding the Russia-Ukraine conflict and Sino-U.S. relations. YM -8.5 & XM -9.5 as a result, moving away from their respective post-Sydney troughs, with the 7- to 15-Year zone of the cash ACGB curve leading the cheapening in wider cash trade. EFPS are incrementally tighter early on. Bills run +2 to -8 through the reds, with IRM2 outperforming, while the backend of the whites and front of the reds represent the weakest point on the strip (albeit trading comfortably clear of their respective post-Sydney lows). There isn’t much in the way of tier 1 domestic data to the move the needle on Monday, although Melbourne Institute inflation expectations will be worth watching, with focus squarely on Tuesday’s RBA decision (the MNI markets team leans towards a 15bp rate hike come the end of tomorrow’s meeting, expect our full preview of the event to be released early in the London morning).