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Off Lows


Quiet Start


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IRZ1 Lifted

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A generally muted overnight session for core global FI markets left T-Notes in a narrow 0-02+ range, last -0-01+ at 132-20, with benchmark yields little changed across the curve, in what was a typical pre-NFP session for the Asia-Pac region. T-Notes operate on light volume of ~44K at typing. The major cash benchmarks generally trade little changed to a touch richer on the day. The aforementioned NFP release headlines the local docket on Friday, with Fedspeak from Barkin also due.

  • JGB futures held to a narrow range, last +3, with the local COVID issues and stronger than expected local wage data having no real impact on the space. There may have been some incremental support from a solid liquidity enhancement auction for off-the-run JGBs with 1- to 5-Years until maturity, with the major benchmarks generally trading unchanged to a touch firmer across the cash curve.
  • YM unchanged with XM +1.0 in Sydney. There were no surprises provided in the release of the RBA's latest SoMP given the guidance already seen earlier this week. The A$800mn auction of ACGB Nov '24 went well, with the cover ratio moving higher vs. the prev round of supply for the line, while the weighted average yield printed 0.74bp through prevailing mids at the time of supply (per Yieldbroker pricing). There were some interesting swings in ACGB Apr '24 (the bond targeted by the RBA under its 3-Year yield targeting mechanism), which forms part of the YMM1 basket. The line traded as low as 0.055% in yield terms (comfortably through the Bank's 0.10% target) before backing off to trade at 0.09% at typing. The retracement came as the RBA noted that it "is currently accepting requests to borrow the Apr '23 and Apr '24 bonds via its own facility only. The indicative fee to borrow these bonds is currently 25 bps, subject to change." Back in March the RBA lifted the cost of borrowing of these lines to 100bp, as it looked to limit short selling that was testing the implementation of its 3-Year yield targeting mechanism. Shorts in the line were squeezed in the early goings as they seemingly looked to secure bonds for settlement of existing positions. The weekly RBA issuance slate was vanilla.