Cheaper, US Tsys and JGBs Weigh, Dec-34 Supply Tomorrow

ACGBs (YM -7.0 & XM -7.5) are cheaper and near Sydney session lows. With today’s session data-light, the push lower can be largely attributed to weakness in US tsys. Cash tsys are dealing 5-6bps cheaper across benchmarks in today’s Asia-Pac session after the observance of the Martin Luther King public holiday yesterday.

• Higher JGB yields may also be weighing on the local market after this morning’s hotter-than-expected PPI and poor absorption of 5-year supply today.
• Cash ACGBs are 6-7bps cheaper, with the AU-US 10-year yield differential 2bps wider at +16bps.
• Swap rates are 6-7bps higher, with EFPs tighter.
• The bills strip has bear-steepened, with pricing -1 to -7.
• RBA-dated OIS pricing is flat to 4bps firmer across meetings, with December leading. A cumulative easing of 48bps is priced for year-end.
• TCV 5.25% A$2.5B Sep-38 bond was priced at EFP+116bps.
• TCorp has launched a new 4.75% 20 September 2035 Sustainability bond via syndication. Indicative price guidance for the transaction is 78-81bps over the 10Y bond futures contract, equivalent to 73.5-76.5bps over the ACGB 2.75% 21 June 2035. Pricing is expected on or before 17 January.
• Tomorrow, the local calendar is empty.
• Tomorrow, the AOFM plans to sell A$800mn of the 3.50% Dec-34.