AU/U.S. Narrower Demand?

Note that Aussie 10s have outperformed their U.S. counterpart during the cheapening witnessed since Wednesday’s Sydney close, with Fed Chair Powell’s focus on a series of rate hikes, as well as a nod to the potential for 50bp rate hikes after a 25bp rate hike in March (inflation dependent) perhaps driving cross market demand. We had noted that the volatility evident in recent days may limit appetite for AU/U.S. 10-Year narrower positions, even as the spread operated above the 30bp mark (which has been the area that has generated relatively widespread cross market interest in recent times). Could Powell’s Wednesday be the trigger for cross market narrowers? The spread is now just below 30bp.