Strong ACGB Offering Helps Long End

The longer end was helped by a well received, large DV01 offering from the AOFM, as average yields at the latest ACGB May 2032 auction priced ~0.4bp through prevailing mids at the time of supply (based on BBG pricing), with the cover ratio firming to 4.4424x, despite the uptick in auction size, representing a solid round of demand (we flagged supportive factors ahead of time in our auction preview). Still, the space held to narrow ranges, with YM -1.0 and XM +0.5 at typing, as the curve twist flattens.

• Early comments from Australian Treasurer Frydenberg outlined the mutually beneficial nature of the Sino-Aussie ties, although he did flag periods of difficulty that have been evident in the relationship. This comes after a Global Times piece pretty much confirmed the thoughts of the sell side re: the recent reports of Australian coal imports into China, in that well established quotas may be providing any import limitations that may or may have not been put into place, although Sino-Aussie tensions are at least a secondary factor that must be considered.
• Australian consumer confidence data from Westpac jumped, in line with what we have seen in the ANZ-Roy Morgan weekly equivalent.
• Bills sit unchanged to -1 through the reds.