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Steepening Impetus Intensifies, Futures Turn Bid On Cautious Mood


Deteriorating risk environment lent support to Aussie bonds and their peers from core FI space. Nominations to the top decision-making bodies of the Chinese Communist Party were closely scrutinised, with local equity benchmarks retreating.

  • Futures regained strength after paring initial gains. YM last +14.0 & XM +5.0, both are printing session highs. Bills trade 4-12 ticks higher through the reds.
  • Initial steepening impetus evident in cash ACGB space deepened as the session progressed. Yields last sit -14.5bp to +4.2bp. 3-Year/10-Year ACGB yield spread widened to 52.5bp, the widest margin since mid-Jul.
  • The AOFM sold A$300mn of ACGB Jun '51, drawing a bid/cover ratio of 1.54x (prev. 2.53x), with the price tail widening.
  • The weekend saw one of the final rounds of comments from Treasurer Chalmers, who will deliver the budget tomorrow. The official said he has learned his lesson from the market reaction to the UK fiscal plan.
  • Elsewhere, RBA Asst Gov Kent said this morning that the central bank is not currently worried by the risk of weak exchange rate amplifying imported inflation.
  • Regional activity was limited by a market closure in New Zealand.

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