Cheaper, Light Calendar, Subdued Session, RBA Minutes On Tuesday

ACGBs (YMH4 -3.8 & XMH4 -0.9) are cheaper and near Sydney session lows after a subdued data-light local session. With US tsys paring their post-FOMC gains in today’s Asia-Pac session, local participants appear to have been content to sit on the sidelines. Considering that the market has priced 130bps of easing by November 2024, compared to the dot plot median easing of 75bps for 2024, a cautious view towards the near-term outlook for the market makes sense. Cash US tsys are currently dealing 3-4bps cheaper.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Judo Bank Flash PMIs.
• Cash ACGBs have reversed early strength to be 1-4bps cheaper, with the 3/10 curve flatter and the AU-US 10-year yield differential 2bps wider at +19bps.
• Swap rates are 2-5bps higher, with EFPs tighter.
• The bills strip has cheapened, with pricing -4 to -6.
• RBA-dated OIS pricing is 2-6bps firmer across meetings, with 57bps of easing priced by Feb’25.
• The local calendar is empty on Monday, ahead of the RBA Minutes for the December Policy Meeting on Tuesday.
• The AOFM plans to provide further details on issuance plans (including any new planned bond lines) for the second half of 2023-24 on 5 January 2024.