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AUSSIE BONDS: Cheaper After US Bear-Flattener, US Tariff Pauses Calm Markets

AUSSIE BONDS
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ACGBs (YM -6.0 & XM -5.5) are cheaper after US tsys bear-flattened, with US yields finishing flat to 5bps higher. 

  • The week began with the fallout from President Trump’s announcement on tariffs on the three largest trading partners of the US. As markets opened, the USD soared, equity futures plunged, and the US tsy curve flattened. However, these moves showed some reversal after Trump agreed to delay the tariffs on Mexico (and now Canada) by a month. Tariff negotiations with China are ongoing.
  • Cash ACGBs are5-6bps cheaper with the AU-US 10-year yield differential at -12bps.
  • Swap rates are 4-5bps higher.
  • The bills strip has bear-steepened with pricing -2 to -7.
  • RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (138%), with the probability of a February cut at 91% (based on an effective cash rate of 4.34%).
  • Today, the local calendar will see Household Spending and S&P Global Composite & Services PMIs.
  • The AOFM announced the issue by syndication of a new 4.25% 21 March 2036 Treasury Bond. The issue will be of a benchmark size. Initial price guidance is a spread of 2 to 5bps to XMH5. The issue is expected to be priced tomorrow.
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ACGBs (YM -6.0 & XM -5.5) are cheaper after US tsys bear-flattened, with US yields finishing flat to 5bps higher. 

  • The week began with the fallout from President Trump’s announcement on tariffs on the three largest trading partners of the US. As markets opened, the USD soared, equity futures plunged, and the US tsy curve flattened. However, these moves showed some reversal after Trump agreed to delay the tariffs on Mexico (and now Canada) by a month. Tariff negotiations with China are ongoing.
  • Cash ACGBs are5-6bps cheaper with the AU-US 10-year yield differential at -12bps.
  • Swap rates are 4-5bps higher.
  • The bills strip has bear-steepened with pricing -2 to -7.
  • RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (138%), with the probability of a February cut at 91% (based on an effective cash rate of 4.34%).
  • Today, the local calendar will see Household Spending and S&P Global Composite & Services PMIs.
  • The AOFM announced the issue by syndication of a new 4.25% 21 March 2036 Treasury Bond. The issue will be of a benchmark size. Initial price guidance is a spread of 2 to 5bps to XMH5. The issue is expected to be priced tomorrow.