Pushing Higher Post-Lowe

ACGBs turned bid in the wake of comments on the RBA by Westpac Chief Economist Bill Evans (Evans sees the Bank reaching a terminal rate of 2.35% in February ’23, which is much less aggressive than market pricing). A downtick in major crude benchmarks and U.S. e-mini futures also lent support to the space, ultimately seeing ACGBs extend their rally following RBA Governor Lowe’s pushback against market pricing of tightening on Tuesday, with yields across the curve operating around one-week lows in the process, with ACGBs bull steepening.

• YM and XM are +9.0 and +5.0 respectively, backing away from their respective best levels of the session heading towards the Sydney close. Bills run +9 to +18 through the reds.
• The latest round of ACGB Apr-25 supply went smoothly, with the cover ratio comfortably above the 3.00x level, and the weighted average yield sitting comfortably through the prevailing mids (1.43bp, per Yieldbroker).
• STIR markets continue to show moderating expectations for tightening in July, with the IB strip pricing in ~45bp of tightening at that meeting, and a cumulative ~255bp of tigthening priced in for the remaining six meetings of calendar ‘22.
• The S&P Global Services and Composite PMIs will headline the domestic data docket on Thursday, with little else on tap for the rest of the week.