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BONDS: ACGB Curve Steepens Following Weak Consumer Confidence

BONDS
BulletMarketsFixed Income Bullets

Aussie bonds saw a bull-steepening move occur following the worsening of WBC Consumer confidence data earlier, dropping 2% for December to 92.8 points, following a gain of 5.3% in the previous month.

  • Australia's consumer confidence fell 2% in December to 92.8, as persistent inflation, high interest rates, and global uncertainties dampened sentiment, according to a Westpac survey. Confidence in the economic outlook weakened sharply, with the 12m and 5yr expectations sub-indexes dropping 9.6% and 7.9%, respectively. Housing sentiment also deteriorated, with the "time to buy a dwelling" index falling 6% amid softer price expectations. The decline comes despite the RBA signaling progress on inflation and a surprise fall in unemployment to 3.9%.
  • ACGBs have traded richer today, the curve has bull-steepened with the 2s10s is 39.25 although off earlier highs of 41. The 2yr is trading -2.2bps at 3.892%, the 3yr is outperforming today -2.5bps at 3.838%, while the 10yr is -1.9bps at 4.295%.
  • ACGB futures are currently YM +2.8, VTA +1.8, XM +2.3
  • Swap curves have flattened, better buying occurring through the belly of curve, last -2bps to -4bps
  • Bill strip is +5 to +3, front -end outperforming.
  • RBA-dated OIS pricing is little changed today for the Feb meeting, with 14bps of cuts price, pricing has firmed for an April cut with 28.5bps currently priced, up from 22.5bps on Monday morning. Looking out to November 2025 the market is currently pricing in 76bps of cumulative cuts
  • Tomorrow, we have Westpac Leading Index, although this is expected to have little impact on the market, there is little else on the calendar for the rest of the year, however the RBA minutes are out on the 20th
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Aussie bonds saw a bull-steepening move occur following the worsening of WBC Consumer confidence data earlier, dropping 2% for December to 92.8 points, following a gain of 5.3% in the previous month.

  • Australia's consumer confidence fell 2% in December to 92.8, as persistent inflation, high interest rates, and global uncertainties dampened sentiment, according to a Westpac survey. Confidence in the economic outlook weakened sharply, with the 12m and 5yr expectations sub-indexes dropping 9.6% and 7.9%, respectively. Housing sentiment also deteriorated, with the "time to buy a dwelling" index falling 6% amid softer price expectations. The decline comes despite the RBA signaling progress on inflation and a surprise fall in unemployment to 3.9%.
  • ACGBs have traded richer today, the curve has bull-steepened with the 2s10s is 39.25 although off earlier highs of 41. The 2yr is trading -2.2bps at 3.892%, the 3yr is outperforming today -2.5bps at 3.838%, while the 10yr is -1.9bps at 4.295%.
  • ACGB futures are currently YM +2.8, VTA +1.8, XM +2.3
  • Swap curves have flattened, better buying occurring through the belly of curve, last -2bps to -4bps
  • Bill strip is +5 to +3, front -end outperforming.
  • RBA-dated OIS pricing is little changed today for the Feb meeting, with 14bps of cuts price, pricing has firmed for an April cut with 28.5bps currently priced, up from 22.5bps on Monday morning. Looking out to November 2025 the market is currently pricing in 76bps of cumulative cuts
  • Tomorrow, we have Westpac Leading Index, although this is expected to have little impact on the market, there is little else on the calendar for the rest of the year, however the RBA minutes are out on the 20th