Off Lows, Largely Being Driven By U.S. Tsy Flows

Flows surrounding U.S. Tys were a dominant factor for the space during Sydney dealing. Meanwhile, the removal of any hedging pressure after A$500mn of 2030-32 NSW TCorp issuance priced further played into the move away from worst levels of the Sydney session.

• YM -6.0 and XM & XM -7.0 at typing, after both failed to get anywhere near challenging their respective cycle lows earlier in the session.
• ACGB Nov-27 supply saw the weighted average yield print 1.19bp through prevailing mids, although cover came in at ~2.50x. As we flagged in our preview, it would seem that market vol. and the hawkish RBA market pricing is keeping many prospective bidders sidelined, while the lack of liquidity means that those that want to guarantee access to the line are having to pay up at auction.
• Elsewhere, the formal release of the RBA’s SoMP provided little impetus for markets as the RBA’s post-meeting statement and Governor Lowe’s subsequent press conference had already fleshed out the shift in the Bank’s inflation forecasts. Wage growth expectations were marked higher, with such a move also flagged in the Bank’s post-decision rhetoric. There was nothing in the way of further discussion when it came to terminal & neutral rate assumptions.
• Next week’s AOFM issuance slate is a little busier, with some Note supply, a couple of ACGB auctions (including A$400mn of ACGB Jun-51) and indexed issuance all due.