Cheaper, US Tsy Yields Highest Since March After US Q1 GDP & Claims Data

ACGBs are sharply lower (YM -9.0 & XM -9.0) after US tsy yields surged following the unexpectedly strong GDP revision and a decrease in jobless claims, which further raised the probability of the FOMC implementing further rate hikes. Rates moved to their highest levels since March, reminiscent of the previous market unease regarding aggressive actions by the Federal Reserve.

• The 2-year rate finished 15bp cheaper at 4.86%. The 10-year rate rose by 13bp to 3.84%. The yield curve continued to invert, reaching -106bp at its lowest point and closing at -102bp.
• Cash ACGBs opened 9bp cheaper with the AU-US 10-year yield differential -1bp at +15bp.
• Swap rates opened 9bp higher.
• The bills strip bear steepens with pricing -4 to -13.
• RBA-dated OIS pricing opened 5-9bp firmer for meetings beyond October. The market attaches a 46% chance of a 25bp hike next week versus 31% pre-retail sales data.
• (AFR) Households have regained almost all the losses inflicted by high-interest rates thanks to a rebound in property prices and the share market, dampening the effect of the RBA’s rate rises. The net worth of the household sector increased by almost $300 billion in Q1, according to ABS data. (See link)
• The local calendar is scheduled to release May Private Sector Credit.