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AUSSIE BONDS: Richer, Trump’s Tariff Policy In Focus, October CPI Tomorrow

AUSSIE BONDS
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ACGBs (YM +6.0 & XM +5.5) are stronger, though off their best levels from the Sydney session in what has been a data-light local trading day. 

  • The market took a positive cue from yesterday’s sharp rally in US tsys. The rally began during the Asia-Pacific session in response to President-elect Trump’s selection of Scott Bessent as Treasury Secretary and extended further in the NY session.
  • Cash US tsys are trading flat to 1bp cheaper in today’s Asia-Pacific session following news of President-elect Trump’s threats to increase tariffs on China by 10% and impose 25% import tariffs on Canada and Mexico.
  • Cash ACGBs are 5-6bps richer with the AU-US 10-year yield differential at +15bps.
  • Swap rates are 3-4bps lower.
  • The bills strip has bull-flattened with pricing flat to +4.
  • RBA-dated OIS pricing is flat to 4bps softer across 2025 meetings. A 25bps rate cut is not fully priced until July.
  • The local calendar tomorrow will see October’s CPI ahead of RBA Governor Bullock’s speech at the CEDA Conference on Thursday.
  • Across the ditch, the RBNZ policy decision is due tomorrow, with all economists surveyed by Bloomberg looking for at least a 50bp cut.
  • The AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond tomorrow and A$700mn of the 1.50% 21 June 2031 bond on Friday. 
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ACGBs (YM +6.0 & XM +5.5) are stronger, though off their best levels from the Sydney session in what has been a data-light local trading day. 

  • The market took a positive cue from yesterday’s sharp rally in US tsys. The rally began during the Asia-Pacific session in response to President-elect Trump’s selection of Scott Bessent as Treasury Secretary and extended further in the NY session.
  • Cash US tsys are trading flat to 1bp cheaper in today’s Asia-Pacific session following news of President-elect Trump’s threats to increase tariffs on China by 10% and impose 25% import tariffs on Canada and Mexico.
  • Cash ACGBs are 5-6bps richer with the AU-US 10-year yield differential at +15bps.
  • Swap rates are 3-4bps lower.
  • The bills strip has bull-flattened with pricing flat to +4.
  • RBA-dated OIS pricing is flat to 4bps softer across 2025 meetings. A 25bps rate cut is not fully priced until July.
  • The local calendar tomorrow will see October’s CPI ahead of RBA Governor Bullock’s speech at the CEDA Conference on Thursday.
  • Across the ditch, the RBNZ policy decision is due tomorrow, with all economists surveyed by Bloomberg looking for at least a 50bp cut.
  • The AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond tomorrow and A$700mn of the 1.50% 21 June 2031 bond on Friday.