Firmer & Flatter On Chinese COVID Worry, Supportive Cash Flow Noted

Aussie bond futures finished a touch shy of their respective Sydney peaks, with the light widening bias in EFPs perhaps partially indicative of the deployment of the cash flows from the maturity of ACGB Nov-22 and notable coupon payments in the ACGB sphere, which we flagged earlier today.

• YM finished +1.0, while XM was +2.5. Wider cash ACGB trade saw 1-4bp of richening, with the super-long end outperforming as the curve bull flattened.
• Local headline flow was light, leaving the aforementioned cash flow and previously covered macro drivers (most notably the COVID situation in China) at the fore, resulting in a bid for the space and an unwind of the early losses, inspired by overnight price action in futures/U.S. Tsys.
• Bills finished +2 to -3 through the reds, with the strip twist steepening.
• Looking ahead, this week’s local docket is headlined by RBA Governor Lowe’s Tuesday dinner address on “Price Stability, the Supply Side and Prosperity.”