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Flatter, In Confined Two-Way Trade

AUSSIE BONDS

Sydney participants were happy to try and force an extension of the overnight U.S. Tsy-driven richening in futures during the early rounds of the session, although there wasn’t much in the way of a meaningful break higher observed.

  • YM and XM then traded to session cheaps in the wake of the latest NAB business survey (with the front end leading the move), which saw the confidence reading push higher to 7 (prev. 2) and conditions move higher to 20 (from 14). When it came to the write up the survey collators noted “a marked rally in the face of headwinds from inflation and rising interest rates, as well as a deteriorating global economic outlook.” The rise in labour costs accelerated further in July, with NAB suggesting that “overall, the survey suggests that despite global and domestic economic headwinds, demand has remained strong - and inflationary pressure continues to build suggesting that inflation is yet to peak.”
  • The space then regained some poise, with a lack of meaningful RBA repricing evident post-data, owing to the fact that much of the inflationary and wage rhetoric fell in line with existing RBA thinking.
  • Note we also saw a couple of soft rounds of domestic consumer confidence data.
  • YM last deals +3.5 on the day, with XM +5.5. Cash ACGB trade sees the major benchmarks running 3-7bp richer on the day, with the broader bull flattening still intact. Bills sit 1-4bp richer through the reds.
  • Looking ahead, A$800mn of ACGB Nov-31 supply headlines Wednesday’s domestic docket.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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