Tighter NSW COVID Restrictions, Some Start To Question RBA Taper

Aussie bond futures nudged higher during the final overnight session of last week, with YM ending +1.0, while XM was +2.5, recovering from worst levels alongside U.S. Tsys. From a technical perspective, XM breached the recent intraday highs on the leg higher, allowing bulls to switch their focus to the 61.8% retracement of the Oct '20 to Feb '21 move lower.

• Local weekend news flow was almost exclusively focused on the NSW COVID situation, with ~250 business leaders meeting with state Treasury officials to discuss the economic hit of the local COVID outbreak. The weekend also saw the NSW Premier tighten non-essential & construction work restrictions across Greater Sydney, with some tighter movement restrictions also issued across 3 areas of the city. Major local banks have started rolling out support packages for customers as a result.
• Late Friday (after the Sydney close) the WSJ's RBA watcher, James Glynn, suggest that "the lockdown that is crippling Sydney looks set to extend indefinitely, sharply increasing the risk that the Reserve Bank of Australia will have to suspend plans to taper its bond buying in September."
• The latest round of scheduled ACGB purchases from the RBA will be conducted on Monday.