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Off Of Extremes Into The Bell


Aussie bonds operate off of cheapest levels as we move towards the Sydney close, with U.S. Tsys trading in a similar manner. That leaves YM -14.5 & XM -13.5, with much of the overnight/early Sydney bear flattening in YM/XM unwound after YM failed to breach its overnight lows. Wider cash ACGB trade sees the major benchmarks print 10-14bp cheaper across the curve, with the belly leading the weakness.

  • EFPs are a little narrower on the day, with the 3-/10-Year box flattening.
  • Bills run 9-17bp cheaper through the reds.
  • The space saw a modest, short-lived bid on the back of a moderation in NZ 2- & 5-Year inflation expectations from across the Tasman, before backing off from best levels alongside U.S. Tsys.
  • The latest round of (infrequent) ACGB Apr-37 supply saw the weighted average yield print 0.51bp through prevailing mids (per Yieldbroker), while the cover ratio came in comfortably below the 2.50x benchmark. The auction was probably a bit softer than we expected on the whole, with the lack of clear micro relative value, flatness of the 5-/15- & 10-/15-Year yield curves and Monday timing of supply (the most illiquid time of the global trading week) the major negatives that we would point to.
  • Moving forwards, the latest Westpac consumer and NAB business confidence surveys headline domestically on Tuesday. Elsewhere, the AOFM is set to come to market with A$100mn of index linked paper.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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