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Overhang U.S. Tsy Impetus, Correction Of Post-RBA Slide Underpin ACGB Resilience

BONDS

Wednesday brought a rebound in ACGBs which appeared keen to recoup some of their post-RBA losses. Headline flow was limited, offering little in the way of notable catalysts to nudge core FI space in any definite direction.

  • Cash ACGBs turned bid as correction of their post-RBA sell-off was facilitated by the initial catch-up with overnight strength in U.S. Tsys. When this is being typed, ACGB yields sit 4.5-7.3bp lower in cash Sydney trade, with the curve running steeper. Futures contracts firmed, with YM last +7.0 & XM +4.5, both slightly off session highs. Bills trade 2-13 ticks higher through the reds. There was no reaction to an auction for A$800mn of ACGB Sep '26, which drew a bid/cover ratio of 3.28x (prev. 4.64x).
  • T-Notes came under light pressure, grinding further away from their best levesl from Tuesday. TYU2 changes hands -0-06 at 118-07+ at typing, printing fresh session lows. Eurodollar futures run 0.5-2.0 ticks lower through the reds. Cash U.S. Tsy yields firmed a tad and last sit 1.4-2.2bp higher across the curve, with 10-Year yield within touching distance from the 3.0% level.
  • JGB futures went offered in tandem with T-Notes. They last trade at 149.56, 5 ticks above previous settlement and close to session lows. Cash JGB yields are generally lower across the curve, but only marginally. Data released out of Japan failed to provoke any response, even as Q1 GDP figures were revised to reflect a smaller contraction. The BoJ conducted its Rinban operations covering 1-3, 3-5, 5-10 & 10-25 Year baskets, which saw the following offer/cover ratios:
    • 1- to 3-Year: 2.57x (prev. 2.47x)
    • 3- to 5-Year: 1.98x (prev. 2.23x)
    • 5- to 10-Year: 2.23x (prev. 2.67x)
    • 10- to 25-Year: 2.98x (prev. 4.27x)

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