Lowe's Comments Trigger Flattening, ACGBs Look Past Local Data

Comments from RBA Gov Lowe have flattened the ACGB curve, as he flagged relatively high 10-Year ACGB yields (as compared to global peers) and failed to rule out adding longer dated bonds to the Bank's ACGB purchase programme, while directly referencing the 5-10 Year sector. Lowe added that the RBA wants to see more than just progress towards full employment and will pay greater attention to actual inflation readings as opposed to forecasts. Local data released after Lowe's address failed to offer much impetus, with consumer inflation expectation edging higher and labour market data not as soft as feared, but still revealing job losses and upticks in spare capacity metrics. Cash yields sit 1.0-7.5bp lower, with 10-Year ACGBs outperforming. YM sits +1.0 & XM +8.0 at typing, bills trade unch. to +2 ticks through the reds. Focus moves to China's inflation data, due shortly.

• T-Notes have held a right 0-02+ range and last sit +0-01+ at 139-08+, with a light bid coming on the back of downticks in e-mini contracts. U.S. Tsy yields sit unch. to 1.0bp across the slightly flatter curve. Eurodollar futures trade +0.5 to -0.5 tick through the reds.
• JGB futures have wavered within a fairly narrow range, last trade at 152.03, 6 ticks above the previous settlement. Cash JGB yields sit slightly lower across the curve. A liquidity enhancement auction covering 5-15.5 Year off-the-run JGBs headlines locally.