At Session Bests Aided By US Tsys and NZGBs

In Asia-Pac trade, ACGBs are stronger (YM +7.0 & XM +9.5) and at session highs as US tsys extend their gains from Thursday. With a light economic calendar and domestic headlines, local traders have been happy to follow US tsys. Currently, cash US tsy yields are 1-2bp lower, and the curve is flatter. Additionally, the sharp richening in NZGBs after the release of RBNZ inflation expectations data is likely to have contributed to the ACGB's move to session highs.

• Cash ACGBs are 8-10bp richer with the 3/10 curve 2bp flatter and the AU-US 10-year yield differential -4bp at -7bp.
• Swap rates are 6-7bp lower with EFPs 2-3bp wider.
• The bills strip twist flattens with pricing -1 to +5.
• RBA dated OIS pricing is mixed with pricing 1bp firmer for June but 2-5bp softer for meetings beyond August.
• The local calendar is light until the RBA Minutes for May are released early next week.
• The AOFM announced a relatively low round of nominal ACGB issuance for next week with the sale A$700mn of the 2.75% 21 June 2025 bond on Wednesday, 17 May. AOFM issuance is set to remain light for the FY ahead with between A$1-1.5bn per week on average.