Flat, Early Losses Pared

Aussie bonds struggled for any real momentum on Monday, with any dips bought on the back of a bid in the JGB space, while there was a alack of meaningful headline flow apparent and wider market liquidity was hampered by the observance of a U.S. national holiday.

• That left YM and XM at unchanged levels come settlement, with Sydney hours ultimately seeing the paring of the modest losses observed during the two-way overnight session that rounded off last week. Yields were essentially unchanged across the curve, while EFPs oscillated around Friday’s closing levels.
• Bills pared the bulk of their overnight/early Sydney losses to finish mixed, -2 to +1 through the reds, as the strip saw some light twist flattening.
• RBA dated OIS was little changed to a touch firmer on the day, showing 20bp of tightening for next month’s gathering, while terminal cash rate pricing hovered between 3.70-3.75%.
• There wasn’t much in the way of domestic headline flow to go off, with Treasurer Chalmers highlighting the robustness of the country’s labour market, particularly in an international context, while he reaffirmed focus the well-documented challenges that the economy faces.
• We have also saw a steady Y/Y Melbourne Institute inflation reading, printing +5.9%, alongside a notable moderation in the M/M print, which moved to +0.2% from +1.0% in Nov.
• Looking ahead, the latest Westpac consumer confidence survey headlines the domestic docket on Tuesday.