Cheaper, 2Y & 5Y Tsy Supply Weigh, Light Local Calendar

ACGBs (YM -2.0 & XM -3.0) are cheaper after US tsys resumed their sell-off following a brief reprieve on Friday. US tsys finished the NY session with yields 2-4bps higher amid a flood of new corporate bonds and US tsy issuance. The 2- and 5-year tsy auctions both tailed.

• According to MNI’s technicals team, the trend direction in 10-year tsy futures remains down with the TYH4 contract trading close to its recent lows. Price has pierced 109-17, 50.0% of the Oct - Dec bull cycle. A clear break of this retracement would strengthen the bearish condition and signal scope for an extension towards 108-19+, the 61.8% Fibonacci level.
• The S&P 500 finished Monday down 0.4%. Goldman Sachs’ Mariotti said “All in all, while a resilient macroeconomic picture and a positive earnings season in the US have continued to support the bullish sentiment backdrop, investors are generally exposed to concentrated positions.” (AFR)
• Cash ACGBs are 1-3bps cheaper with the AU-US 10-year yield differential 2bp lower at -15bps.
• Swap rates are 1-3bps higher, with the 3s10s curve steeper.
• The bills strip is cheaper, with pricing -1 to -3.
• RBA-dated OIS pricing is flat to 2bps firmer, with meetings beyond June leading.
• Today, the local calendar is empty, ahead of January CPI tomorrow.