Incremental Bid On Latest Chinese Pushback Vs. COVID Rumours

A fairly flat start for Aussie bond futures, with YM and XM both dealing incrementally above their late overnight session levels. YM is unchanged vs. Friday’s settlement, while XM prints -3.0. Meanwhile, cash ACGBS are flat to 4.0bp cheaper, as the curve bear steepens. Bills run flat to +4 through the reds, bull flattening, with RBA terminal cash rate pricing incrementally softer, printing at ~4.00%.

• Weekend headline flow was stolen by the COVID situation in China, with Chinese NHC officials noting that the country will “unswervingly” adhere to its current Covid controls as the severity of COVID in China is deepening once again, facilitating the incremental bid in futures.
• This comes after last week was sprinkled with rumours and speculation surrounding the potential for the relaxation of China’s zero COVID strategy, which factored into wider market price action on Friday.
• Post-U.S. NFP gyrations and Fedspeak also added to Friday’s overnight price action, with the former mixed (headline NFPs beat, unemployment moved higher and AHE matched exp.), while some of the Fedspeak was a little more dovish than Fed Chair Powell’s post-meeting press conference.
• The fallout from the weekend’s Chinese COVID headlines will drive matters in Asia-Pac dealing. Chinese trade balance data headlines the wider Asia-Pac docket on Monday, while participants will also be on the lookout for the launch of the syndication of the new ACGB May-34, which is set to price this week.