Off Best Levels

Aussie bonds have pared an earlier bid heading into European hours, with a lack of domestic headline flow and a limited uptick in U.S. Tsys providing little directional impetus for ACGBs (keeping in mind that the ECB’s impending monetary policy decision may be keeping participants on the sidelines). Cash ACGBs run 0.5-1.5bp richer across the curve, with the belly underperforming at the margin. YM is +1.5, a little below best levels after testing its overnight lows while XM is +0.5, coming nowhere near to testing the boundaries of its overnight session range. Bills run 1-3 ticks richer through the reds.

• STIR markets continue to price in ~56bp of tightening for the RBA’s Aug meeting after speeches by RBA Gov Lowe and Reserve Gov Bullock on Tue and Wed, sitting little changed from levels observed at the beginning of the week.
• Friday will see the Australian composite and services flash PMIs for July headline the data docket, while A$700mn of ACGB Sep-26 will be on offer ahead of the release of the AOFM’s weekly issuance slate.