Pressure Maintained

Weakness in core global FI markets keeps the pressure on Aussie bonds in early trade this week, while there has been nothing in the way of tangible follow through on the back of Q4 retail sales volume data, which wasn’t quite as soft as feared, nor on the uptick observed in the Melbourne Institute inflation gauge. Still, ranges remain relatively contained thus far, with YM -13.0 & XM -12.0. The former has tested its overnight base, while the latter had a look through its own post-Sydney lows, before correcting from worst levels. Cash ACGBs sit 8.5-13.5bp cheaper, with the curve bear flattening. Bills are 7-15bp lower through the reads, with bear steepening intact on the strip. EFPs are wider to start the week, suggesting payside swap flow is aiding the weakness in bonds.