Higher Again As Lowe Plays Down Market Pricing Of Tightening

Aussie bonds pull further away from session lows, with YM now into positive territory on the day on the back of RBA Governor Lowe playing down the chances of the RBA meeting market pricing re: tightening in ’22 (citing the pure velocity of such a move and economic headwinds that such tightening would foster), although XM is lagging, with the curve twist now twist steepening on the day. Cash ACGB trade sees the curve pivot around the 5- to 6-Year zone, while 10s present the weakest point on the curve. EFPs are now a touch tighter on the day, reversing the early widening and more. Bills run 3-19bp richer on the day through the reds on the back of Lowe’s comments, with the whites leading. Note that some pricing of tightening has come out of the IB strip when it comes to the July meeting, with the market now pricing a 50bp hike in July after looking for 57bp of tightening earlier today (after Lowe pointed to a discussion re: a 25 or 50bp hike in July).