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Firmer On Narrower Fiscal Deficit

AUSSIE BONDS

ACGBs sit a little below session highs, having richened after Australian Treasurer Chalmers delivered a preview of Australia’s final 21/22 budget results.

  • Chalmers highlighted that the budget deficit for 21/22 will improve by “almost A$50bn” vs. projections made in March, although he suggested that the bulk of the improvement was “driven by temporary factors.” The March forecasts projected a A$79.8bn deficit for 21/22, with Chalmers alluding to a wider deficit in 22/23 vs. actual 21/22 levels (March’s projections looked for a deficit of A$78.0bn in 22/23).
  • Cash ACGBs run 4.5-6.5bp richer across the curve, with the super-long end leading the way higher. YM is +5.5 and XM is +3.5. EFPs are little changed, while Bills run 2 to 6 ticks richer through the reds.
  • ACGBs looked through the release of the RBA’s Sep meeting minutes.
  • RBA Oct dated OIS now price in ~42bp of tightening, unwinding the uptick to ~45bp that came after Westpac’s call for a 50bp Oct hike from the RBA (made late Monday).
  • The Westpac leading index and a speech by RBA Deputy Gov. Bullock will headline the domestic docket on Wednesday.
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ACGBs sit a little below session highs, having richened after Australian Treasurer Chalmers delivered a preview of Australia’s final 21/22 budget results.

  • Chalmers highlighted that the budget deficit for 21/22 will improve by “almost A$50bn” vs. projections made in March, although he suggested that the bulk of the improvement was “driven by temporary factors.” The March forecasts projected a A$79.8bn deficit for 21/22, with Chalmers alluding to a wider deficit in 22/23 vs. actual 21/22 levels (March’s projections looked for a deficit of A$78.0bn in 22/23).
  • Cash ACGBs run 4.5-6.5bp richer across the curve, with the super-long end leading the way higher. YM is +5.5 and XM is +3.5. EFPs are little changed, while Bills run 2 to 6 ticks richer through the reds.
  • ACGBs looked through the release of the RBA’s Sep meeting minutes.
  • RBA Oct dated OIS now price in ~42bp of tightening, unwinding the uptick to ~45bp that came after Westpac’s call for a 50bp Oct hike from the RBA (made late Monday).
  • The Westpac leading index and a speech by RBA Deputy Gov. Bullock will headline the domestic docket on Wednesday.