Light Bull Flattening, Futures Off Overnight Highs

Richening in the wider core global FI space supported Aussie bond futures in post-Sydney trade, but both YM & XM have softened a touch as Sydney settles into Wednesday dealing after a similar move was seen in U.S. Tsys into the NY bell.

• Gloomy economic outlooks provided by the CEOs of some of the major U.S. investment banks and weaker oil prices were in the driving seat when it came to wider core FI price action on Tuesday.
• YM prints +1.0 & XM is +4.0 as a result. Wider cash ACGB trade sees 1-4bp of richening as the curve bull flattens.
• Bills sit 2bp cheaper to 1bp richer through the reds.
• RBA dated OIS continues to point to a terminal cash rate of ~3.65%.
• Wednesday’s local docket will be headlined by Q3 GDP data (after we saw a surprise current account deficit and a smaller than expected detraction to GDP from net exports in Tuesday’s releases) and A$900mn of ACGB Nov-33 supply.