AUSSIE BONDS: AUCTION PREVIEW: ACGB Nov-31 Supply Due

• Tsys saw large swings on Tuesday, the 10yr yield briefly dropped to 4.10% before rebounding to 4.24% on tariff relief comments from Lutnick, while fed fund futures are pricing in nearly 80bps of Fed rate cuts by year-end, while the move higher in yields gathered steam late in the session as bund futures slid following a report on Germany’s defense funding plans. TU is trading -02 ¼ at 103-15⅝ vs highs 103-25⅛, while TY is -10 at 110-30 vs highs of 111-21.
• A record-breaking Tsys block trade saw a seller offload 78,000 10yr note June futures in early London trading, with a DV01 $5.1m The trade, executed at a price of 111-19 (around 4.15% yield), raises speculation about whether it’s a real-money fund fading the recent Treasury rally or a hedge against aggressive call option buying targeting yields as low as 3.85%, per bbg.
• Cash tsys yields closed at session highs up 4-9bps while the curve bear-steepened. The 2yr closed +4.1bps at 3.99%, while the 10yr closed +8.9bps at 4.244%. The 2s10s closed +5bps at 25bps.
• Concerns over US tariffs' economic impact have fueled bullish Treasury bets, with JPMorgan’s client survey showing the most bullish positioning in 15 years. Large block trades and surging call option activity suggest traders are targeting 10yr yields falling below 4%, with some positioning for as low as 3.85%.
• The Trump administration may announce a pathway for tariff relief on Mexican and Canadian goods covered by North America's free trade agreement as soon as Wednesday, Commerce Secretary Howard Lutnick said. per BBG
• Trump will address the joint session of Congress at 2100ET, with attention then turning to  ADP private employ data tomorrow morning at 0815ET.

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 4.25% 21 March 2036 bond. This new line was sold by syndication on 5 February 2025 for A$15.0bn. The sale drew an average yield of 4.46% and was covered 5.56x. 

• This week's ACGB supply is in line with the usual weekly issuance of A$1.5bn, with A$700mn of the 1.00% 21 December 2030 bond to be issued on Friday.
• According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance has been revised to approximately A$95 billion, with A$46.4 billion completed at that time. This includes around A$2 billion in Green Treasury Bond tenders, of which A$600 million had been issued at that time, and A$3 billion in Treasury Indexed Bonds, with A$1.7 billion completed at that time.
• Results are due at 0000 GMT / 1100AEST.

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.740/851 - High Mar 4 / High Dec 11 
• PRICE: 95.705 @ 16:17 GMT Mar 4
• SUP 1: 95.300 - Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.549 - 1.0% 10-dma envelope

Aussie 10-yr futures are maintaining the bounce, pushing prices closer toward first resistance. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.