Off Worst Levels At The Bell, RBA Up Next

Aussie bonds were fairly unreactive to the latest round of comments pointing to a further thawing of Sino-Aussie relations (see earlier bullet for more colour on that matter), seeing an incremental uptick post-headlines, but they were already moving away from cheapest levels of the day alongside U.S. Tsys.

• That left YM –9.0 & XM -8.0 at the close, with wider cash ACGBs running 5-9bp cheaper across the curve, as the early bear flattening bias was maintained, albeit moderating from session extremes.
• Aussie 10s have outperformed their U.S. counterpart in the time since Friday’s Sydney close, given the impulse derived from U.S. data & Fedspeak (and WSJ Fed report Timiraos’ latest article), with the spread between the two compressing by a little over 9bp, hovering just above -10bp.
• Bills are 4-13bp cheaper through the reds.
• EFPs finished around session wides.
• The latest RBA monetary policy decision headlines tomorrow’s domestic docket, with a 25bp hike the consensus view, as well as being an outcome that is essentially fully priced by markets. Terminal cash rate pricing has pushed back above 3.70%, in lieu of repricing surrounding the Federal Reserve post-NFPs. Expect the usual early release of the key SoMP projections to be embedded into the post-meeting statement. Our full RBA preview will be published shortly.