Cheaper, Fitch US Ratings Warning Weighs

ACGBs are cheaper (YM -8.0 & XM -4.0) sitting just off Sydney session cheaps. With local economic data and headlines light, local participants have been on US tsy watch.

• To recap, early in the session Fitch placed the US on negative ratings watch as the deadline for an increase in the debt ceiling approaches. US tsys are 1-3bp cheaper in Asia-Pac trade with the curve flatter.
• Cash ACGBs are 4-7bp cheaper with 3/10bp curve flatter and the AU-US 10-year yield differential -2bp at -7bp.
• Swap rates are 2-4bp higher with EFPs 2bp tighter.
• The bills strip bear flattened with pricing -3 to -7.
• RBA dated OIS are 1-6bp firmer with late ‘23/early ’24 leading.
• The local calendar heats up tomorrow after a light few days with the release of April Sales. While the official ABS retail estimates account for regular seasonal fluctuations, they can encounter challenges during the Easter period. This is primarily due to the variable timing of the holiday and its proximity to other holidays, which can disrupt the accuracy of the adjustments.
• Later today sees the release of Q1 US GDP (2nd estimate). Nonetheless, the market attention is likely to remain on US debt ceiling negotiations.