10-Year Hits Lowest Yield Since August

ACGBs closed richer (YM +5.0 & XM +2.0) but well off session bests as hope surrounding further support for the U.S. banking sector pressured U.S. Tsys in Asia-Pac trade, offsetting gains sparked by weakness in Chinese property developer names. Cash ACGBs were 2-4bp richer on the day with the 3/10 curve 2bp steeper and the AU-US 10-year yield differential -2bp at -18bp. After hitting its lowest level since August (3.14%), the benchmark 10-year yield closed at 3.20%.

• Swaps curve bull steepened with rates flat to 3bp stronger and EFPs 2bp wider.
• Bills strip pricing is +2 to +4bp with whites leading.
• RBA dated OIS closed 4-7bp softer for meetings beyond May with 37bp of easing priced by year-end. No change remained priced for April.
• After a light calendar today, things heat up tomorrow with the release of Retail Sales for February. After a volatile couple of months related to Black Friday sales (-4.0% M/M in December followed by +1.6% in January), the market will be keen to get a read on whether household spending weakness seen in Q4 GDP data has carried over into early 2023.
• With the global calendar is relatively light until later in the week when Euro Area CPI (Mar) and US PCE deflator (Feb) are released, the market will likely find itself guided by banking headlines.