Richer, But Off Best Levels

Aussie bonds deal shy of best levels, with a modest downtick in U.S. Tsys applying some pressure, although ACGBs have held on to the bulk of gains made after catching up to Friday’s recession worry-driven richening in core global FI markets. Cash ACGBs run 7-11bp richer across the curve, with the belly leading the bid. YM and XM are +9.5 & +11.0, respectively, after failing to challenge their overnight session peaks. Bills run 6 to 11 tick richer through the reds, bull flattening.

• The latest round of ACGB-47 supply went smoothly, with the weighted average yield printing 2.22bp through prevailing mids (per Yieldbroker). The cover ratio improved to 2.46x (from 2.09x prev.), although the low frequency at which the line is issued (last auction in Dec ‘19) may limit the usefulness of comparisons to past results. The earlier-flagged, easily-digestible DV01 and inversion in the ACGB Mar-47/Jun-51 spread likely contributed to the smooth auction, adding to tailwinds from the broader stabilisation in Aussie bonds from outright cycle cheaps.
• The domestic data docket and RBA speaker slate is empty on Tuesday, with Q2 CPI expected to provide the first point of interest for the week when it crosses on Wednesday.