Holding Cheaper & Steeper, ACGB Dec-34 Syndication Slated For Next Week

Aussie bond futures operated in relatively close proximity to their respective overnight lows for most of Friday’s Sydney session, with a shallow look through the overnight base in YM futures failing to generate a meaningful extension. The former sits -2.0, while the latter is -4.5. Wider cash ACGB trade sees 2.5-5.5bp of cheapening, with the overnight/early Sydney bear steepening impulse remaining in play.

• There hasn’t been much in the way of meaningful local news flow to shape price action, which left participants pondering and adjusting to price action in wider markets for most of the day.
• The AOFM’s announcement re: its intent to issue the new ACGB Dec-34 via syndication next week applied some brief pressure to XM futures, although the overnight/early Sydney lows in the contract held, before it bounced back towards pre-syndication announcement levels. A quick reminder that the AOFM had previously outlined its intention to introduce ACGB Dec-34 in the current quarter.
• Bills sit flat to 3bp cheaper through the reds, off lows, with a modest steepening bias.
• RBA-dated OIS is little changed on the day, with the terminal rate pricing hovering at ~3.65%, and just under 15bp of cuts priced by year-end (vs. the current terminal cash rate pricing).
• Looking ahead, the minutes from the most recent RBA meeting, CBA household spending data and flash Judo Bank PMI prints headline locally next week.