At Session Cheaps, 10YY Pushes To Highest Since 2011

ACGBs (YM -6.0 & XM -10.0) bear-steepen, with the 10-year yield pushing to 4.98%, its highest level since 2011. This follows the release of data that showed credit to businesses and consumers rose more than expected in September. Private Sector Credit rose 0.5% m/m versus a +0.3% estimate. Loans to buy homes, consumers and businesses rose respectively +0.4% m/m, +0.6% m/m and +0.8% m/m.

• Weakness in ACGBs, particularly the long end, also reflects spillover from higher global bond yields. The 10-year JGB yield has pushed 6.6bps higher to a new cycle high of 0.963% today after Nikkei headlines posited the BOJ will consider tweaking the yield curve control (YCC) framework at today’s policy meeting.
• US tsys were pressured in yesterday’s NY session on the belief that higher JGB rates could pull demand away from US tsys. Supply concerns and risk-on sentiment also weighed. So far in today’s Asia-Pac session, US tsys are little changed.
• Cash ACGBs are 6-10bps cheaper, with the AU-US 10-year yield differential 7bps wider at +8bps, the highest level since July.
• Swap rates are 5-9bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing -1 to -4.
• RBA-dated OIS pricing is flat across meetings out to Mar’24 and 2-3bps firmer beyond. Terminal rate expectations jump 2bps to 4.54% (+47bps by Aug’24).