Off Cheaps

Aussie bonds have unwound the bulk of the modest cheapening observed during the early part of the Sydney session alongside an uptick in U.S. Tsys (with the latter seemingly aided by weakness in the USD after the PBOC set the daily CNY mid-point fixing at a stronger-than-expected level), returning them to levels observed near the Sydney open.

• Cash ACGBs run 1.5-4.5bp cheaper across the curve, with the 10- to 12-Year zone leading the way lower.
• YM is -2.0 after failing to breach its overnight low, while XM is -4.0, after breaking its overnight levels. EFPs have narrowed a little, while Bills run 1 to 3 ticks cheaper through the reds.
• The latest round of semi supply (a A$1bn tap of May-28 paper) from the South Australian Financing Authority (SAFA) saw little by way of a meaningful move in XM futures around pricing but may have factored into the early downtick for XM.
• Friday will see A$700mn of ACGB Apr-29 on offer at auction followed by the release of the AOFM’s weekly issuance slate, with no domestic economic data releases of note scheduled.