Cheaper With US Tsys After Lower Than Expected Jobless Claims

ACGBs (YM -3.0 & XM -3.0) are cheaper in line with overnight developments in US tsys. US tsys reacted negatively to initial jobless claims that came out lower than anticipated.

• US initial jobless claims fell 17k last week to 233k, a larger drop than the market expected while continuing claims were in line at 1875k. Nevertheless, it was a surprisingly large hawkish reaction from US tsys to data, which showed little improvement in underlying terms. However, the data did at least rule out a further deterioration in the labour market.
• The US 10-year yield returned to around 4%, 4bps higher on the day. The US 2-year finished 8bps cheaper at 4.04%.
• Cash ACGBs are 3bps cheaper, with the AU-US 10-year yield differential at +11bps.
• Swap rates are 3bps higher.
• The bills strip is slightly cheaper, with pricing flat to -2.
• RBA-dated OIS pricing is 1-3bps firmer across meetings. As a result, pricing is 5-20bps firmer across meetings than pre-RBA levels on Tuesday. A cumulative 22bps of easing is priced by year-end versus 30bps before the RBA decision.
• Today, the local calendar is empty apart from the AOFM’s planned sale of A$700mn of the 4.75% 21 April 2027 bond.