Closes At Bests As U.S. Tsys Unwind Early Weakness

ACGBs close near session highs (YM +19.0 & XM +15.5) as U.S. Tsys unwind the weaker open to Asia-Pac trade following the weekend’s banking news. A decline in regional bank stocks, after news that Credit Suisse AT1 bondholders were set to be wiped out, appeared to strengthen the recovery in U.S. Tsys.

• Cash ACGBs richened 14-16bp with the 3/10 curve 2bp steeper and the AU-US 10-year yield differential -1bp at -17bp.
• Swaps curve bull steepened 2bp with rates 15-17bp lower.
• Bills strengthened 20-23bp across the strip with late whites/early reds leading.
• Ahead of the release of the RBA Minutes tomorrow, RBA dated OIS softened 20-30bp for meetings beyond May. Today’s move reinforced the message from last week that the peak in the cash rate this cycle had already been seen.
• By the close, the market had priced 37bp of easing by year-end, after receiving a boost from comments by RBA Kent regarding the elongated lags for policy this cycle as well as an acknowledgement that the banking crisis, among other issues, would be considered at the April meeting.
• The highlight of the global calendar nonetheless will be the FOMC meeting (Tue/Wed). BBG consensus expects a 25bp hike, although some analysts expect no move.