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A Benchmark Rate at 2% Would 'Not Be Excessive'


Yield curve shifts higher with 5s30s flattening


Austria lowers 2021 funding target


Trading Near Recent Highs

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T-Notes last +0-02 at 133-02, operating in a narrow 0-04 range. Cash Tsys trade little changed to ~1.0bp richer across the curve, regaining some poise in the wake of the cheapening seen since Friday's NFP print. Fed's Bullard ('22 voter) reiterated his view that the central bank should "press ahead with a plan to dial down its massive pandemic stimulus programme despite an abrupt slowdown in U.S. jobs growth last month," via an interview with the FT. Broader macro news flow was on the light side, while the only real market flow of note came in the form of a 4.0K screen lift in TY. The NY session will bring the JOLTS job openings print and the release of the Fed's beige book. Wednesday will also bring 10-Year Tsy supply, while Fedspeak from Williams & Kaplan rounds off the local docket.

  • The JGB space looked through local data releases, with futures a touch above their overnight closing levels, last dealing -7 on the day. Yields are little changed across the JGB curve, sitting within -/+0.5bp of Tuesday's closing levels. One of the more notable candidates in the race to become leader of Japan's ruling LDP Party, Fumio Kishida, reiterated his desire to deploy a spending package worth tens of trillion yen, a need to retain bold monetary easing policies and a rethink of tax on financial income. All in all there was no fresh notable information in the address, with the central tenants of Kishida's ideals surrounding these matters already known, and no pressing need for notable tax overhauls observed e.g. consumption tax. The latest round of BoJ Rinban operations revealed the following offer/cover ratios: 1- To 3-Year: 2.30x (prev. 2.60x), 5- To 10-Year: 2.51x (prev. 2.93x).
  • Aussie bond futures have stabilised in Sydney dealing, aided by the modest Asia-Pac bid in U.S. Tsys, leaving YM -1.0 and XM -3.0 at typing. The longer end of the cash ACGB curve has cheapened by ~4.0bp. There hasn't been much in the way of local news flow, with focus still on yesterday's RBA decision. The latest round of ACGB Sep '26 supply saw the weighted average yield price 0.45bp through prevailing mids at the time of supply, while the cover ratio ticked higher, moving above 6.00x, even as the auction size lifted. Another smooth takedown for ACGB supply, with well-trodden factors set to support primary demand in the coming months. Corporate and semi-issuance continued to tick over, headlined by the launch of QTC's new green Mar '32 line.