Cheaper, US Tsys Weaker, Awaits WPI

ACGBs are weaker (YM -5.0 & XM -5.5) after the NY session closed with US tsys cheaper. After the bell, 2- and 10-year benchmark yields were respectively 7bp and 3bp higher. US economic data released generally pressured US tsys with retail sales ex-autos and gasoline rising 0.6% m/m, higher than the market had expected. Industrial production and the NAHB housing market index both surprised positively. Bond supply once again weighed on US tsys with Pfizer doing a $31bn issuance, the fourth largest on record. Fedspeak echoed recent comments by supporting holding rates but remaining open to hikes based on data. Elsewhere, Canadian headline CPI beat expectations, but the core measure eased.

• Cash ACGBs opened 5-6bp cheaper with the AU-US 10-year yield differential -1bp at -7bp.
• Swap rates are 4-6bp higher with the curve steeper.
• Bills are cheaper with pricing -3 to -8, late whites leading.
• RBA dated OIS opened 1-7bp firmer across meetings.
• The Wage Price Index is scheduled for release today with the market closely watching to see if last quarter’s soft outcome is reversed.
• Further afield, Japan sees the release of Q1 GDP and March Industrial Production.
• The AOFM plans to sell A$700mn of the 2.75% 21 June 2035 bond.