NZGB Spillover Weighs

Weakness in NZGBs across the Tasman may have had some cross-market spillover for ACGBs, with financial year-end for 3 of the major Australian banks and a duration contraction in the ACGB indices at month-end resulting in no real counter. As a result, we saw the space steepen in early Sydney trade, before a move off lows in U.S. Tsys helped the space off cheaps.

• YM -1.5, XM -2.0. The cash curve also runs steeper on the day, with EFPs tightening.
• The latest round of 10-Year ACGB supply was solid enough, although it is worth noting that the only successful bidder paid 0.9bp through the prevailing mid-yield at the time of the supply, while the cover ratio eased, but still held above 4.00x.
• Local data and Chinese PMIs had no tangible impact on the space.
• Bills +1 to -2 through the reds, fronts outperform.
• Final m'fing PMI, job vacancies and CoreLogic house price data are all due tomorrow.