Holding Cheaper Into Europe

Aussie bonds are off their extremes, holding cheaper within relatively tight ranges, with the proximity to the FOMC decision likely limiting activity after the adjustment to Tuesday’s core FI moves.

• Cash ACGBs run 3.0-8.0bp cheaper across the curve, with the 10- to 12-Year zone leading the way lower. YM is -6.0 while XM is -9.0. EFPs are little changed, while Bills run 1 to 6 ticks cheaper through the reds.
• A speech by RBA No. 2 Bullock ultimately saw little by way of a meaningful, lasting move in ACGBs, with a brief blip lower in YM observed, likely on remarks that the RBA would look at opportunities for tapering (although she later said that the RBA has no plans to sell bonds before maturity).
• The auction of A$800mn of ACGB Apr-33 went smoothly enough on both pricing and cover metrics, with no notable reaction observed in ACGBs after.
• Australian markets will be closed for the Queen’s memorial public holiday on Thursday.