Twisting Flatter

The continued twist flattening of the U.S. Tsy curve during early Asia-Pac trade has exerted a similar force on the ACGB space. Cash ACGBs of course had to catch up to the overnight moves in futures, and now sit 10bp cheaper to 1bp richer (with the wings of the curve representing the respective extremes), pivoting around the 10- to 12-Year zone. YM is now -7.5 on the day, off worst levels, while XM is flat vs. settlement.

• Note that there has been some early interest in an article in the local press which noted that “some of Australia’s biggest investors are piling into bonds, in a bet backing RBA Governor Philip Lowe’s assessment that a series of robust interest-rate hikes will help get inflation under control next year.”
• Bills run 1-24bp cheaper trough the reds, bear flattening, which you would expect given the CPI/Fed-driven dynamic observed in wider core global FI since yesterday’s settlement levels. A reminder that labour market data (due in ~40 minutes) provides the highlight of today’s domestic docket, with consumer inflation expectations due imminently (at the top of the hour).