Cheaper As Israeli Strike Induced Rally Fades By Friday’s Close, Q1 CPI On Wednesday

ACGBs (YM -6.0 & XM -6.0) are sharply cheaper as US tsys pare strength instigated by Israel’s attack on Iran by the end of trading on Friday. This occurred after Tehran appeared to play down the retaliation.

• That left US tsys to focus on ongoing strength in US economic data and the potential for rate cuts to be pushed further out this year. The Fed entered its media Blackout regarding policy on Friday.
• US equity markets were mostly weaker on Friday led by the Nasdaq, which declined around 2%. The recent AI hi-flyer Nvidia was the big loser, dropping 10%.
• Australia will cut the growth outlook for most major economies, including key trading partner China, when it releases its budget next month, Treasurer Jim Chalmers said. (BBG)
• Cash ACGBs are 5-6bps cheaper, with the AU-US 10-year yield differential 1bp lower at -31bps.
• Swap rates are 5-6bps higher, with the 3s10s curve unchanged.
• The bills strip has bear-steepened, with pricing -1 to -7.
• RBA-dated OIS pricing is 1-5bps firmer for meetings beyond June, with early 2025 leading. A cumulative 18bps of easing is priced by year-end.
• Today, the local calendar is empty apart from the AOFM’s sale of A$800mn of the 0.5% Sep-26 bond.
• The local calendar’s highlight this week will be Q1 CPI data on Wednesday.