Cheaper With US Tsys, Light Local Calendar

ACGBs (YM -4.0 & XM -4.0) are cheaper after US tsys opened the new year with a yield jump. US tsys bear-flattened, with yields 4-8bps higher, as traders pared their bets for a pivot to rate cuts by the Federal Reserve. A heavy corporate calendar, negative spillover from European bonds and profit-taking on the late 2023 rally likely exacerbated the move. Losses were pared after Construction Spending (0.4% m/m vs. 0.5% est.) and S&P Global US Manufacturing PMI (47.9 vs. 48.4 est) printed weaker-than-expected.

• A 1.6 % drop in the NASDAQ led losses on Wall Street, but the indices finished off at their worst levels. Elsewhere, gold declined and oil slumped.
• Cash ACGBs are 3bps cheaper, with the AU-US 10-year yield differential 2bps narrower at +11bps. It is important to note however that cash US tsys will not be trading in today's Asia-Pac session due to a public holiday in Japan.
• Swap rates are 2bps higher, with the EFPs slightly tighter.
• The bills strip is cheaper, with pricing -3 to -4.
• RBA-dated OIS pricing is flat to 4bps firmer across meetings. 60bps of easing is still priced by November.
• Today, the local calendar is empty, ahead of Judo Bank PMI Composite & Services tomorrow.