Steeper With Plenty Of Local Risk Events In Motion

The Aussie bond curve holds steeper on the day, with YM -1.0 and XM -7.5 at typing, as the latter flirts with its intraday lows. Swaps have narrowed vs. ACGBs.

• The Australian GDP reading was stronger than median expectations.
• Elsewhere, RBA Governor Lowe & Deputy Governor Debelle are making an appearance in front of the Economic Standing Committee in Canberra, which has generated little in the way of surprise with debate. The impact of flows vs. stock of QE, relative bond yield dynamics, direction of the AUD (with AUD TWI at the fore), focus on unemployment as opposed to the risk of excessive borrowing levels, housing prices, infrastructure investment and the Bank's economic outlook dominate the lines of questioning.
• It is worth noting that Lowe pointed to an open mind re: the potential extension of QE beyond the already outlined A$100bn level, with that particular thought process to focus on economic performance, relative central bank stances and the functioning of markets.
• The latest ACGB '31 offering saw a soft cover ratio, at least by recent standards, perhaps the recent cheapening scared off a chunk of the potential bidders even against the upcoming Christmas break for AOFM issuance. Still, average yields managed to stop ~0.6bp through prevailing mids at the time of auction (per BBG pricing).