Cheaper And Flatter To Start, SoMP Headlines

ACGBS are biased cheaper on the back of Thursday’s cheapening in U.S. Tsys, leaving YM -8.0 and XM -5.5, with the former testing its overnight base and the later through its own post-Sydney low, extending on the pull away from YtD richest levels. Wider cash ACGB trade sees 6-7bp of cheapening, as the curve bear flattens. Note that Aussie 10s have actually seen more pressure than their U.S. counterpart in the time since Thursday’s Sydney close, with the spread between the two pushing out by another couple of bp, showing above the +5bp marker.

• Bills run 3-8bp cheaper through the reds, while RBA-dated OIS pushes higher, leaving ~23bp of tightening priced for next month’s meeting, while terminal cash rate pricing shifts to just above 4.10%, as the post-meeting adjustment continues.
• The release of the RBA’s SoMP dominates the domestic docket ahead of the weekend, with particular focus on the Bank’s underlying inflation forecasts given the lack of explicit colour on the matter in Tuesday’s hawkish post-meeting statement.
• Other points of interest include A$500mn of ACGB May-28 supply, the release of the weekly AOFM issuance slate and Chinese inflation data.