Holding Firm In Wake Of ECB & BoE

Bond futures finished a little shy of their Sydney session peaks, after reaction to Thursday’s key central bank meetings drove a bid in the early rounds of Friday trade (with a late pullback in the overnight session providing an opportunity for slightly better entry points).

• YM was +14.0, while XM finished +16.0, with both breaching overnight highs, although lacking meaningful momentum thereafter. The 10- to 12-Year zone outperformed on the wider ACGB curve, with the major benchmarks running 10-16bp richer on the day.
• Bills were 5-17bp richer through the reds, as the strip bull flattened. Meanwhile, RBA dated OIS continues to near-enough fully price in a 25bp hike for next week’s meeting, although terminal rate pricing has come in and is showing back below 3.65% after finishing just above 3.70% yesterday.
• There wasn’t anything in the way of meaningful reaction to firmer than expected Caixin services PMI data out of China.
• Participants are now looking ahead to the U.S. NFP print, which will cross in the overnight session.
• Further out, next week’s key domestic risk events include the RBA monetary policy decision mentioned above, the subsequent release of the RBA SoMP, Q4 retail sales volume, trade balance data and the Melbourne Institute inflation metrics.
• Note that next week’s AOFM issuance slate sees a continued A$1.5bn run rate for ACGB issuance, albeit over 2 auctions (ACGB May-28 & Nov-33), as opposed to this week’s 3.