Off Session Cheaps With JGBs After A Stronger Than Expected 5Y JGB Auction

In roll-impacted trading, ACGBs (YM +0.8 & XM +1.9) are near session highs after dealing in a relatively narrow range during the Sydney session. The previously outlined consumer and business confidence data failed to be a market mover.

• Accordingly, local participants have likely had their attention focused on the JGB market and any spillover to US tsys after yesterday’s heavy session.
• After extending weakness in morning trade, JGBs have moved away from session cheaps after 5-year supply saw stronger than expected demand.
• US tsys have also pared early Asia-Pac weakness, with benchmark yields flat to 1bp richer.
• Cash ACGBs are 1-2bp richer, with the AU-US 10-year yield differential 1bp lower at -14bp.
• Swap rates are 2-3bp lower across the curve.
• Bills strip pricing is flat to +2.
• RBA-dated OIS pricing is flat to 2bp softer across meetings.
• (AFR) Australia’s building industry will fall 160,000 homes short of the country’s 1.2 million target over the next five years, even after a renewed surge of apartment investment triggered by a shortage of dwellings and rising prices, Master Builders Australia forecasts show. (See link)
• Tomorrow the local calendar will see CBA Household Spending data.
• The AOFM has no plan to sell nominal bonds tomorrow.