Paring Initial Bid

Aussie bonds backed away from best levels as we worked through the Sydney day, with the initial bid pared after the release of Australian and Chinese data. Cash ACGBs have twist steepened, running 5.0bp richer to 1.5bp cheaper across the curve, pivoting around 15s, with 30s providing the weak point. YM and XM are +4.0 and +0.5 respectively, while bills run 1-5 ticks firmer through the reds.

• In terms of details, better than expected Australian private sector credit data for May came alongside a jump in job vacancies (the latest signal of continued tightening in the labour market), while official Chinese m’fing and non-m’fing PMIs returned to expansionary territory (the non-m’fing reading provided a notable beat vs. expectations).
• It was hard to ascertain a reason for the early bid in the space, with spill over from NY Tsy trade cited. Quarter-end rebalancing may have been at play, although month-end rebalancing should have been pretty neutral based on sell-side calculations (if not marginally negative for the space).
• Friday’s domestic data docket will be headlined by final S&P Global m’fing PMI reading. Elsewhere, the AOFM will release its weekly issuance slate.