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AUSSIE BONDS: Richer As US Tsys Rally On Bessent Selection

AUSSIE BONDS
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ACGBs (YM +7.0 & XM +7.5) are sharply stronger. 

  • In response to President-elect Trump's selection of Scott Bessent as Treasury Secretary, US tsys rallied significantly. The 10-year yield fell by 13bps to 4.27%, nearing levels seen before the election. Meanwhile, the yield curve flattened as 2-year yields dropped by 10bps, matching the 4.27% level.
  • Bessent's "3-3-3 Plan" aims to reduce the deficit to 3% of GDP, drive economic growth to 3%, and increase oil production to 3 million barrels.
  • A strong 2-year auction also supported.
  • The commodities weakened on reports of a potential ceasefire agreement to halt fighting for 60 days in Lebanon between Israel and Hezbollah.
  • Cash ACGBs are7bps richer with the AU-US 10-year yield differential at +14bps.
  • Swap rates are 5bps lower.
  • The bills strip has bull-flattened with pricing flat to +6.
  • RBA-dated OIS pricing is flat to 5bps softer across 2025 meetings. A 25bps rate cut is not fully priced until July.
  • The local calendar is empty until October’s CPI tomorrow and RBA Governor Bullock’s speech at the CEDA Conference on Thursday.
  • This week, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday. 
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ACGBs (YM +7.0 & XM +7.5) are sharply stronger. 

  • In response to President-elect Trump's selection of Scott Bessent as Treasury Secretary, US tsys rallied significantly. The 10-year yield fell by 13bps to 4.27%, nearing levels seen before the election. Meanwhile, the yield curve flattened as 2-year yields dropped by 10bps, matching the 4.27% level.
  • Bessent's "3-3-3 Plan" aims to reduce the deficit to 3% of GDP, drive economic growth to 3%, and increase oil production to 3 million barrels.
  • A strong 2-year auction also supported.
  • The commodities weakened on reports of a potential ceasefire agreement to halt fighting for 60 days in Lebanon between Israel and Hezbollah.
  • Cash ACGBs are7bps richer with the AU-US 10-year yield differential at +14bps.
  • Swap rates are 5bps lower.
  • The bills strip has bull-flattened with pricing flat to +6.
  • RBA-dated OIS pricing is flat to 5bps softer across 2025 meetings. A 25bps rate cut is not fully priced until July.
  • The local calendar is empty until October’s CPI tomorrow and RBA Governor Bullock’s speech at the CEDA Conference on Thursday.
  • This week, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday.