Steepening Theme Spills Into ACGBS

Wider moves in core global FI markets were at the fore when it came to ACGBs, leaving YM and XM off worst levels after a foray below their respective overnight troughs, -1.5 & -7.5, respectively. The wider ACGB curve has twist steepened, with benchmarks running 1.5bp richer to 8.5bp cheaper, pulling the 3-/10-Year curve further away from cycle flats.

• The 3-/10-Year EFP box has twist steepened, putting an end to the recent consistent flattening pressure.
• Bills sit +5 to -2 through the reds, also twist steepening. RBA dated OIS prices in 43bp of tightening for next week’s decision, little changed on the day, while terminal rate pricing is 5-10bp softer, sitting just below 4.30%.
• There was no tangible reaction to the slightly firmer than expected domestic retail sales data for August (+0.6% M/M vs. BBG Median +0.4%).
• Elsewhere, the final Australian underlying deficit for FY21/22 came in at -A$32.0bn, roughly in line with the positive adjustments flagged by the Treasurer in recent weeks, with fiscal headwinds touted once again.
• Job vacancies data headlines the domestic docket on Thursday.