Off Early Lows

The impulse from U.S. Tsys (supportive factors have been outlined elsewhere) has provided a light bid for the Aussie bond space, with futures moving away from early Sydney lows, after bears failed to force a test of overnight troughs. YM -2.0 & XM -4.0 as a result, paring some of the overnight losses. Cash ACGB trade sees a fairly parallel shift in the 10+-Year zone.

• Elsewhere, Australian Treasury Secretary Kennedy (who also sits on the RBA board) noted that fiscal stimulus should be tapered (a trend that is already in place) in order to facilitate the start of the monetary policy normalisation process. Kennedy did caution that premature tightening could prevent Australia from reaching full employment, while reaffirming the broader uncertainty when it comes to the required level of unemployment that would facilitate notable wage growth.