At Cheaps, Underperforming U.S. Tsys

ACGBs sit near session cheaps (YM -9.0 & XM -7.5) ahead of the bell with local headlines light and U.S Tsys modestly softer in Asia-Pac trade. Cash benchmark yields are 7-8bp higher with the 3/10 curve 1bp flatter and the AU/US 10-year yield differential +4bp at -22bp.

• Swaps are 4-6bp cheaper with EFPs 2-3bp tighter.
• Bills strip pricing is -7 to -11 with late whites/early reds leading.
• With the local focus likely to have already shifted to next Tuesday’s RBA decision the question for the market is whether this week’s CPI and retail sales data has been enough to offset resilient business conditions and robust jobs data and deliver a pause.
• RBA dated OIS pricing suggests it is with only an 18% chance of a 25bp hike priced. Interestingly, May meeting pricing hit its highest level since 15 March with cumulative tightening over April and May meetings at 10bp.
• The local calendar is light tomorrow with Private Sector Credit (Feb) as the highlight.
• Elsewhere, Treasurer Chalmers announced that he will release the findings from the independent review of the RBA in mid-April.
• With the global calendar relatively light today, the markets will be closely watching to see if the recent improvement in risk sentiment can extend further.