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AUSSIE BONDS: Near Worst Levels, Pressured By US Tsys, Data Light Session

AUSSIE BONDS
RegionGlobalBulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM -6.0 & XM -6.0) are weaker and near Sydney session lows on a data/newsflow light day. 

  • The local market has been pressured by cash US tsys, which are 2-3bps cheaper in today’s Asia-Pac session, extending Friday’s modest cheapening. Market participants will be looking for US inflation and payroll figures this week to guide on the pace of interest rate cuts by the Federal Reserve this year.
  • Cash ACGBs are 6bps cheaper, with the AU-US 10-year yield differential at +21bps.
  • Swap rates are 6bps higher.
  • The bills strip has bear-steepened, with pricing -1 to -7.
  • RBA-dated OIS pricing is 1-6bps firmer for 2025 meetings, with the later meetings showing the greatest increase. The market is pricing in a modest cumulative 4bps of easing by the end of the year, positioning the expected cash rate at its highest level since late July.
  • Tomorrow, the local calendar is empty ahead of Q3 CPI data on Wednesday.
  • There is a 70% 3-year correlation between NZ and Australian underlying inflation down from 95% in H1 2022. NZ’s moderated to 3.4% from 3.6%, significantly less than the 1.1pp drop in annual headline inflation. Australia’s trimmed mean is forecast to moderate to 3.5% from 3.9% in Q3, which would still be higher than NZ’s.
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ACGBs (YM -6.0 & XM -6.0) are weaker and near Sydney session lows on a data/newsflow light day. 

  • The local market has been pressured by cash US tsys, which are 2-3bps cheaper in today’s Asia-Pac session, extending Friday’s modest cheapening. Market participants will be looking for US inflation and payroll figures this week to guide on the pace of interest rate cuts by the Federal Reserve this year.
  • Cash ACGBs are 6bps cheaper, with the AU-US 10-year yield differential at +21bps.
  • Swap rates are 6bps higher.
  • The bills strip has bear-steepened, with pricing -1 to -7.
  • RBA-dated OIS pricing is 1-6bps firmer for 2025 meetings, with the later meetings showing the greatest increase. The market is pricing in a modest cumulative 4bps of easing by the end of the year, positioning the expected cash rate at its highest level since late July.
  • Tomorrow, the local calendar is empty ahead of Q3 CPI data on Wednesday.
  • There is a 70% 3-year correlation between NZ and Australian underlying inflation down from 95% in H1 2022. NZ’s moderated to 3.4% from 3.6%, significantly less than the 1.1pp drop in annual headline inflation. Australia’s trimmed mean is forecast to moderate to 3.5% from 3.9% in Q3, which would still be higher than NZ’s.