Richer, Light Calendar, Tracking Tsys, Technical Buying

ACGBs (YM +3.0 & XM +2.0) are richer and at or near Sydney session highs. With the domestic data calendar empty today, local participants appear to have been guided by US tsy dealings in today's Asia-Pacific session. Cash US tsys are flat to 3bps richer so far, partially unwinding yesterday's twist-steepening.

• Today’s local price action also seems technical in nature. Some local participants have possibly used the heavy price action this week to either cover shorts or enter longs after the 3-year and 10-year futures contracts were pushed to cycle lows.
• According to MNI’s technicals team, the 3-year contract has now solidified the break below support at 95.970, the Jul 26 low (continuous) and the base of a recent range. Clearance of this level strengthens a bearish theme and highlights the potential for a move towards 95.541, 2.618 projection of the Mar 21 - May 2/May 5 price swing. Key resistance and the top of the range is at 96.340, Aug 9 / Sep 4 high.
• The cash ACGB curve has bull-steepened, with yields 2-3bps lower. The AU-US 10-year yield differential is 3bps lower at -21bps.
• Swap rates are 3bps lower, with EFPs little changed.
• The bills strip has bull-flattened, with pricing flat to +5.
• RBA-dated OIS pricing is flat to 5bps softer, with Dec’24 leading.