Cheaper To Start The Week, Payrolls & Earnings Weigh On US Tsys

ACGBs (YM -4.0 & XM -3.5) are cheaper after a stronger-than-expected December Non-Farm Payrolls report weighed on US tsys, as it reduced the chances of the FOMC easing policy sooner than later. A rise in earnings added to inflation concerns but a weaker-than-expected ISM services report generated some recovery in US tsys. This demand proved temporary with this week’s supply weighing into the close.

• The US tsy 10-year yield finished up 5bps at 4.05%, with the 2-year rate unchanged at 4.38%. It was the second consecutive session with the 10-year closing above 4%, the first time since December 13.
• US equity indices were little changed on Friday, but all three major US benchmarks were lower for the shortened trading week. It was the worst start to a year since 2003.
• Cash ACGBs are 3-4bps cheaper, with the AU-US 10-year yield differential unchanged at +12bps.
• Swap rates are 4bps higher.
• The bills strip is cheaper, with pricing -2 to -5.
• RBA-dated OIS pricing is flat to 5bps firmer across meetings out to December. A cumulative 41bps of easing is priced for 2024.
• Today, the local calendar is light, with Foreign Reserves as the sole release.