Off Best Levels

Aussie bonds have edged further away from overnight highs alongside a similar move in the U.S. Tsy space, although ACGBs remain comfortably above Friday’s closing levels on spillover from recession-related worry following a mix of weak PMI data prints out of the U.S. and Europe on Friday. Cash ACGBs run 6.5-10.0bp richer across the curve, with the belly leading the bid, seeing 10s sit 10bp richer after printing as much as ~14bp richer earlier in the session. YM and XM are +8.0 and +9.5, respectively, dealing around Sydney session lows, while Bills run 4 to 10 ticks richer through the reds, bull flattening.

• STIR markets now point to ~54bp of tightening priced in for the RBA’s Aug meeting, continuing to tick lower from its mid-July peak of ~64bp, mirroring the drift lower in Fed rate hike expectations from their own mid-July extremes amidst the recent run of disappointing U.S. economic data prints and Fed guidance re: the impending hike.