Off Best Levels

ACGBs have backed away from earlier session highs, with the cash curve running 5.0bp to 15.0bp richer, bull flattening. YM +16.0 and XM +9.5 at typing, sitting a little lower after bettering their overnight highs, while bills run 4 to 21 ticks higher through the reds.

• Aussie bonds have caught a bid in line with core FI markets on the back of wider recessionary worry, with defensively-tilted flows observed in the G10 FX space as well on the back of previously fleshed-out developments across the region such as the move lower in Taiwanese chip giant TSMC and bad debt manager China Great Wall Asset Management missing its second deadline for its ‘21 annual report. This helped to extend risk-off flows that initially stemmed from Thursday’s recessionary-induced price action.
• STIR markets continue to see little movement re: expectations for rate hikes ahead of the RBA next Tuesday, continuing to point to ~45bp of rate hikes priced in for July, with a cumulative ~229bp priced in for calendar ‘22.
• The AOFM issuance slate announced for next week provoked little reaction in the ACGB space, with the latest update headlined by AOFM fleshing out its intention to issue a new May-34 bond via syndication in Q2 of the current FY.
• Monday will see a slew of data due - Melbourne Institute Inflation, ANZ job advertisements, housing data, and building approvals, although Tuesday’s RBA meeting will provide more impetus for the space.