Cheaper Ahead Of RBA Gov. Bullock’s Parliamentary Testimony

ACGBs (YM -2.0 & XM -2.5) are cheaper after US tsys cheapen 3-5bps across benchmarks as Federal Reserve policymakers continue to say that expectations for rate cuts in 2024 are too aggressive, though cuts are likely later in the year.

• The Federal Reserve has time to wait before cutting interest rates as the economy remains strong even as inflation falls, Richmond Fed President Thomas Barkin said Thursday.
• The $25bn 30Y supply showed sold demand metrics, but support for US tsys was unwound by the close.
• The market awaits CPI revisions from the BLS early Friday: BLS will update seasonal factors affecting CPI inflation through 2019-23. This won’t impact the underlying NSA data but will sway near-term trends and has been flagged by both Fed Governor Waller and Chair Powell referencing the upside surprise in last year’s annual revision. Analysts are mixed, seeing either very little impact or a modest uplift in recent trend rates.
• Cash ACGBs are 2-3bps cheaper, with the AU-US 10-year yield differential 3bps tighter at -2bps.
• Swap rates are 2-3bps higher.
• Bill strip pricing is -1 to -3.
• RBA-dated OIS pricing is flat to 3bps firmer.
• Today, the local calendar will see RBA Governor Bullock appear before the House of Reps Economics Committee at 0930 AEDT.