Steeper On The Day, Front End Underpinned

Follow through from a bit of an overnight session recovery in futures aided ACGB bulls in early Sydney trade, with notable screen lifts in YM futures further underpinning the front end.

• Still, the post-Sydney high in YM futures provided some resistance, halting the richening, before a subsequent round of cheapening in broader core global FI markets applied some pressure to ACGBs.
• That pushed the space away from best levels of the Sydney session, with some oscillation observed thereafter.
• YM finished +7.0 as a result, while XM was flat, with the steepening theme ever present through Wednesday dealing (whether it was in bull or twist fashion), leaving wider cash ACGBs running flat to 8.5bp richer at the bell.
• Bills finished 4-10bp richer through the reds, with some bull flattening apparent, while RBA dated OIS was little changed to a touch softer vs. late Tuesday levels, pricing 18bp of tightening for the Feb ’23 meeting and a terminal cash rate of ~3.70%.
• Local headline flow didn’t move the needle, with the continued thawing of Sino-Aussie relations and a soft Westpac leading index print observed.
• The domestic docket is now empty in the run up to Christmas.