Aussie bond futures initially showed through their overnight session lows shortly after the Sydney re-open, as the impulse from Friday’s Gilt-driven cheapening, alongside an expected uptick in food price inflation owing to notable floods in food producing areas of Australia and PM Albanese outlining a A$9.6bn round of infrastructure spending, generated fresh pressure.

• That was before some hope surrounding a firmer fiscal footing in the UK provided a bit of a bid for the space, leaving the major cash ACGB benchmarks flat to 2bp cheaper across the curve ahead of the bell, as the 10- to 12-Year zone leads the weakness, while YM is unch. and XM is -2.0.
• A word of caution from Treasurer Chalmers re: the broader economic situation probably aided the rebound at the margin.
• Swaps have lagged the move in bonds, with the early narrowing of EFPs reverting to widening, led by 10s, as the 3-/10-Year EFP box steepens.
• Bills run 1-3bp cheaper across the curve, with RBA dated OIS pointing to a terminal rate of ~4.05%, little changed on the day.
• Tomorrow’s domestic docket is headlined by the minutes covering the latest RBA decision and an appearance RBA Deputy Governor Bullock, with her address on in front of the AFIA annual conference to be on the topic of “Policymaking at the Reserve Bank.”