Steeper, With Offshore Matters Eyed

Aussie bonds trade steeper vs. settlement given the offshore dynamic witnessed since Tuesday's Sydney close, with YM -0.5 and XM -3.5, as the contracts hold to familiar ranges. Swap spreads have narrowed vs. cash ACGBs.

• Local final services & composite PMI readings came and went without any notable market impact and only slight deviations vs. the flash readings. IHS Markit noted that "the picture for the Australian services economy remains positive at the end of the year, with expectations for an expansion in activity remaining at high levels. However, concern surrounding the pandemic persists with the re-imposition of restrictions in southern states following a resurgence in infection rates."
• Offshore developments will be eyed during Wednesday's session, with focus on the Georgia Senate run-offs in the U.S., and, to a lesser degree, Chinese Caixin services and composite PMI readings.