Firmer Overnight

Aussie bonds futures experienced some notable firming in overnight trade, aided by the broader core global FI dynamics that have been covered previously. YM and XM finished a touch below their respective overnight highs, but still sit comfortably above yesterday’s settlement levels shortly after the Sydney re-open, with the former +14.5 and the latter +16.0, virtually in line with levels observed at the overnight close. A reminder that the Aussie bond curve bull steepened during Wednesday’s Asia-Pac session, aided by the broader market dynamics and Westpac Chief Economist Bill Evans providing an RBA view that was notably more dovish than existing market pricing.

• Bills richened further overnight, with Fed rate hike premium pulled out of the market and general recession worry intensifying. That leaves the IR strip running 5-21bp richer through the reds, roughly in line with late overnight levels.
• Flash PMI data headlines a thin domestic docket on Thursday and isn’t usually a market mover.