Cheaper, Subdued Start To Holiday-Shortened Week For US Tsys

ACGBs (YM -1.0 & XM -3.5) are slightly cheaper after a typically subdued start to a holiday-shortened week. US tsys finished 4-5bps cheaper ahead of supply. There were few other catalysts for the move.

• There was little reaction to lower-than-expected New Home Sales at 662k vs. 675k est (prior up-revised to 664k from 661k), MoM -0.3% vs. 2.1% est (prior up-revised to 1.7% from 1.5%).
• The market’s focus is on Friday’s release of US PCE deflators. That said, the scope for any major surprises should be limited in Good Friday trading, with the CPI and PPI figures feeding into that release.
• (AFR) Persistently high inflation, bubbling wage pressures, weak productivity growth and stimulus from income tax cuts mean borrowers may have to wait another year for the Reserve Bank of Australia to cut the cash rate. (See link)
• Cash ACGBs are 1-4bps cheaper, with the AU-US 10-year yield differential 1bp lower at -19bps.
• Swap rates are 1-2bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing flat to -3.
• RBA-dated OIS pricing is little changed. A cumulative 40bps of easing is priced by year-end.
• Today, the local calendar will see Westpac Consumer Confidence.