Weaker On Wednesday

Aussie bonds were seemingly driven by cross-market flows on Wednesday, with an early U.S. Tsy-inspired bid giving way as trans-Tasman impetus from a softer NZGB complex post-NZ labour market data applied pressure, before a second round of cheapening was seen as U.S. Tsys came back from highs.

• Some desks pointed to set up ahead of next week’s ACGB May-34 syndication as a source of pressure, but it is hard to be sure on that front, especially as the curve flattened on the day.
• YM finished -9.0, with XM -4.5.
• Local data was mixed vs. consensus exp., with a lack of meaningful market impetus derived from the housing finance and building approvals prints.
• EFPs were wider all day, but pulled back from extremes, with the 3-/10-Year box steepening a touch.
• Bills were 2-14bp cheaper through the reds at the bell, bear steepening.
• Looking ahead Thursday’s local docket will see final services and composite PMI data from S&P Global, as well the monthly trade balance reading. Elsewhere, RBA’s Kearns, who is Head of the Bank’s Domestic Markets divison, will participate on a panel discussing the topic of “Wholesale Market Conditions and Resilience.”