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Weakness Extends

AUSSIE BONDS

The Aussie bond space has extended lower alongside the steepening in JGBs and a downtick in U.S. Tsys, with the major cash ACGB benchmarks now running 13-18bp cheaper on the day, bear steepening. YM prints -14.0 & XM is -16.0, with the latter printing through its September lows, allowing bears to focus on the cycle lows which were printed back in June.

  • There hasn’t been a defined headline catalyst for the move, with the weakness seemingly accelerating as XM pressed through its September lows and with wider core global FI markets coming under some pressure.
  • Payside swap flows have also helped, with EFPs pushing wider on the day.
  • Treasurer Chalmers has outlined the expected GDP & inflation impact from the recent floods in Australia, which will be manageable, but served as preparatory remarks ahead of the release of the Federal Budget.
  • Bills run 3-22bp cheaper through the reds, with RBA terminal rate pricing extending to ~4.40% in the dated OIS space.
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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