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Tighter Purse Strings And Global Sentiment at The Fore

AUSSIE BONDS

The previously outlined cross-asset moves were in the driving seat in early Sydney dealing, which leaves YM +4.5 & XM +7.5 as we move towards the close, with an early blip lower more than reversed. Tightening in EFPs suggest that receive side flows in swaps may have aided the richening.

  • Elsewhere, a weekend AFR interview with Australian Treasurer Chalmers may have provided the ACGB space with more of a reason to go bid as e-minis pulled away from best levels of the day and Chinese equities struggled in early dealing. To recap, Chalmers noted that the new government will make deeper cuts than it initially envisaged when its comes to the October Budget. He also suggested that the government will then look to build public support for a “second-term agenda of tough revenue and spending measures needed to repair the nation’s finances.” Nonetheless, bonds are off best levels, aided by a recovery in both e-minis and Chinese equities.
  • Elsewhere, AFR sources noted that "Chalmers has overridden Reserve Bank of Australia governor Philip Lowe’s wishes and will appoint a panel of independent experts to review the central bank, including a monetary policy expert from overseas. Dr Lowe, who the treasurer has said he has a “mountain of respect for”, has pushed for a joint RBA-Treasury review of the central bank, similar to a model employed by Canada, to ensure the RBA’s independence from politics and to protect its reputation." This didn’t have anything in the way of tangible impact on the space.
  • When it comes to calendar risk, participants were already looking ahead to Tuesday, when we will get the latest address from RBA Governor Lowe, the release of the minutes from the RBA’s June monetary policy meeting and the Bank’s review of its yield targeting mechanism.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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