Light Twist Steepening

Aussie bonds failed to provide any meaningful movement on Tuesday, and were subjected to some light twist steepening pressure, leaving YM +1.0 & XM -1.0 at the close, while wider cash ACGBs ran 1.5bp cheaper, pivoting around the 7-Year zone.

• An early, light bid seemed to be aided by receiver side flow in swaps as EFPs tightened a little vs. yesterday’s closing levels, before a pre-Chinese data cheapening move in U.S. Tsys saw the space off best levels.
• The Chinese data deluge saw beats across the board, headlined by firmer than expected Q4 GDP data, then applied some modest pressure.
• ACGBs then edged off of cheaps ahead of the close.
• A$ denominated supply, from both offshore and onshore names continued to tick over, focused on the belly of the curve.
• Bills were -2 to +1 through the reds as the strip twist flattened, with RBA-dated OIS continued to show ~20bp of tightening for next month’s meeting, alongside a terminal OCR somewhere below 3.70-3.75%.
• Looking ahead, tomorrow’s local docket is empty, with the broader macro focus set to fall on the latest BoJ decision given the recent, well-documented challenge of the Bank’s YCC parameters (which were only tweaked last month, in a move that caught most off guard).