Futures Retrace Initial Gains, Cash Curve Twist Steepens

The ACGB curve twist steepens in cash Sydney trade, with yields last seen -6.5bp to +8.2bp. The spread on 3-Year/10-Year debt has moved past the 50bp level, closing on the Oct 13 high of 55.50bp.

• The steepening move was inspired by overhang impetus from Friday's NY session, with the curve shifting higher from the opening levels.
• Futures have come under light pressure, paring initial gains, with YM last +5.0 & XM -2.0. Bills run unch. to -3 ticks through the reds.
• The weekend saw one of the final rounds of comments from Treasurer Chalmers, who will deliver the budget tomorrow. The official said he has learned his lesson from the market reaction to the UK fiscal plan.
• Elsewhere, RBA Asst Gov Kent said this morning that the central bank is not currently worried by the risk of weak exchange rate amplifying imported inflation.
• Regional activity may be limited by a market closure in New Zealand.
• Domestic data docket is virtually empty at the start to the week, with CPI figures set to draw attention on Wednesday. Elsewhere, the AOFM will auction ACGB Jun '51 at the top of the hour.