Cheaper But Off Lows, US Tsy Yields Higher After ECI Data

ACGBs (YM -5.0 & XM -5.5) are cheaper but off session lows possibly due to spillover from a post-employment data rally in NZGBs. NZGBs are 1-4bps richer, with the 2/10 cure flatter.

• The weaker tone for the ACGB market reflects the softer lead-in from US tsys, which cheapened 3-5bps across benchmarks following slightly stronger than expected US employment cost data. Month-end flows could also have contributed to the cheapening.
• Cash ACGBs are 5-6bps cheaper, with the AU-US 10-year yield differential unchanged at +5bps.
• The cash ACGB 10-year yield is 4.98%, 5bps higher on the day, after earlier touching 5.0% for the first time since 2011.
• Swap rates are 4-5bps higher.
• The bills strip has bear-steepened, with pricing -3 to -6.
• RBA-dated OIS pricing is 1-5bps firmer across meetings, with terminal rate expectations at 4.59% (+52bps by Jun’24).
• CoreLogic House Prices rose 0.9% m/m in October. The combined capitals index is up 6.8% y/y. Sydney +9% y/y, Melbourne +2.4% y/y and Brisbane +7.8% y/y.
• Judo Bank Manufacturing PMI fell to 48.2 from 48.7 in September. It was the lowest reading since June 2023. New orders fell, registering the lowest reading since May 2020.
• Building Approvals are due later.
• Today, the AOFM plans to sell A$800mn of the Apr-33 bond.