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AUSSIE BONDS: Bear Steepener After US Tsy Twist-Steepener

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM -1.0 & XM -3.5) are weaker after US tsys finished with a modest twist-flattener. Trading was orderly and calm as the markets continued to absorb the bullish economic policies of the new administration. US yields finished 1bp lower to 5bps higher. 

  • President Trump demanded that "interest rates drop immediately" when he spoke remotely at the World Economic Forum meeting in Davos, Switzerland.
  • Initial jobless claims were a touch higher than expected at 223k (sa, cons 220k).
  • AU S&P Global Flash PMIs printed: Mfg Index rises to 49.8 from 47.8 in Dec.; Services Index falls to 50.4 from 50.8 in Dec.; and Composite Index rises to 50.3 from 50.2 in Dec.
  • Cash ACGBs are1-4bps cheaper with the AU-US 10-year yield differential at -14bps.
  • Swap rates are 1-3bps higher, with the 3s10s curve steeper.
  • The bills strip flat to -2 across contracts.
  • RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is more than fully priced for April (112%), with the probability of a February cut at 72% (based on an effective cash rate of 4.34%).
  • The AOFM plans to sell A$700mn of the 1.50% 21 June 2031 bond today.
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ACGBs (YM -1.0 & XM -3.5) are weaker after US tsys finished with a modest twist-flattener. Trading was orderly and calm as the markets continued to absorb the bullish economic policies of the new administration. US yields finished 1bp lower to 5bps higher. 

  • President Trump demanded that "interest rates drop immediately" when he spoke remotely at the World Economic Forum meeting in Davos, Switzerland.
  • Initial jobless claims were a touch higher than expected at 223k (sa, cons 220k).
  • AU S&P Global Flash PMIs printed: Mfg Index rises to 49.8 from 47.8 in Dec.; Services Index falls to 50.4 from 50.8 in Dec.; and Composite Index rises to 50.3 from 50.2 in Dec.
  • Cash ACGBs are1-4bps cheaper with the AU-US 10-year yield differential at -14bps.
  • Swap rates are 1-3bps higher, with the 3s10s curve steeper.
  • The bills strip flat to -2 across contracts.
  • RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is more than fully priced for April (112%), with the probability of a February cut at 72% (based on an effective cash rate of 4.34%).
  • The AOFM plans to sell A$700mn of the 1.50% 21 June 2031 bond today.