Cheaper As Global Yields Continue Their March Higher

ACGBs (YM -3.0 & XM -4.0) are weaker after global rates resumed their push higher, despite little newsflow. The US tsy 10-year yield reached 4.35%, the highest level since 2007, before finishing at 4.34%. The real 10-year TIPS yield also reached a milestone, hitting 2% for the first time since 2009. The curve continues to steepen with the 2-year rate up 6bp from the Friday close, at 5.0% and the 10-year rate up 8bp to 4.34%.

• The pivotal economic event of this week centres on the speech by Fed Chair Powell at the Jackson Hole gathering on Friday.
• Elsewhere, seven London banks slashed their growth forecasts for China on Monday after what was dubbed “disappointing” and “piecemeal” support measures from the central bank. China is facing a “downward economic spiral” amid a mounting crisis in its debt-laden property sector, analysts have warned.
• Cash ACGBs opened 2-4bp cheaper, with the AU-US 10-year yield differential 1bp tighter at -4bp.
• Swap rates are 2-3bp higher, with the 3s10s curve steeper.
• The bills strip is cheaper with pricing -1 to -2.
• RBA-dated OIS pricing is slightly firmer across meetings.
• This week the local calendar is very light, with Judo Bank PMIs tomorrow being the only release.