Notably Firmer As The Day Wore On

Aussie bonds generally tracked the relatively limited U.S. midterm-driven gyrations in U.S. Tsys during the first half of the Sydney session, before extending higher and outperforming after a shallower bid came into Tsys.

• We didn’t see much in the way of overt domestic/idiosyncratic triggers to drive the outperformance, which extended as the major futures contracts made a meaningful break above their respective overnight highs, leaving cross-market moves and the breach of overnight session highs at the fore when it comes to explainers.
• Softer than expected Chinese CPI data may have helped the space find a base earlier in the session, with the passage of yesterday’s ACGB May-34 syndication also removing supply-related pressure.
• That left YM +11.0 & XM +17.0 at the close. Cash ACGBs sit 10-17bp richer across the curve, after 10s outperformed all day.
• EFPs were wider, with the 3-/10-Year box bull steepening.
• Bills print 2-9bp richer through the reds, bull flattening.
• Looking ahead, an address from RBA Deputy Governor Bullock, with the topic of “The Economic Outlook” in front of the ABE annual dinner headlines during the Sydney evening.