Cheaper, RBA Policy Decision Today, BoJ Policy Decision Too

ACGBs (YM flat & XM -2.5) are cheaper after a typically subdued start to the week, with investors keeping to the sidelines ahead of a busy week. US tsys finished the NY session flat to 2bps cheaper, ahead of Wednesday’s FOMC Decision.

• US 2- and 5-year yields made fresh YTD highs, with the 10-year stopping just shy of its high of 4.3486%.
• The local market’s focus today however is likely to be the RBA Policy Decision. The RBA is unanimously expected to leave rates at 4.35%. We expect some form of tightening bias to be retained as the data since the last meeting has been broadly in line with the RBA’s projections. (See MNI RBA Preview here)
• Elsewhere, the BoJ also delivers its Policy Decision, with Nikkei adding to recent reports across multiple newswires that the central bank is to end YCC and ETF purchases along with the heavily sourced exit of negative interest rates. (See MNI BoJ Preview here)
• Cash ACGBs are flat to 2bps cheaper, with the AU-US 10-year yield differential 1bp lower at -19bps.
• Swap rates are flat to 2bps higher with the 3s10s curve steeper.
• The bills strip is little changed.
• RBA-dated OIS pricing is slightly softer for late-24 meetings. A cumulative 42bps of easing is priced by year-end.