Off Lows, RBA Terminal Reassessed

ACGBs moved off early Sydney cheaps as U.S. Tsys firmed (likely on the back of Asia-Pac participants looking to the lack of fresh hawkish rhetoric from Fed Chair Powell on Tuesday), leaving both YM & XM -2.0 at the close. Both contracts respected their overnight session lows on a test during early Sydney dealing. Cash ACGBs were 1.5-2.5bp cheaper, with a light flattening bias seen.

• Bills finished flat to -3 through the reds, while RBA dated OIS continued to show ~20bp of tightening for next month’s meeting, as terminal pricing held just above 3.95%. Meanwhile, the latest BBG survey saw the median RBA terminal rate view shift up to 3.85% from 3.60% (range 3.60-4.10%), in lieu of the tweaks to yesterday’s post-meeting statement.
• Local issuance matters provided the only real domestic points of note, with ACGB Nov-33 supply passing smoothly (see our post-auction bullet for more on that), while the semi side saw SAFA launch a new May-38 line (as much as A$1bn issued this time around), which is set to price on Thursday.
• Comments from Treasurer Chalmers went over old ground, pointing to notable economic headwinds, albeit with no expectations for a recession in Australia.
• Tomorrow’s domestic docket is empty, save weekly AOFM Note supply.