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Early Strength Gone, US Tsys Pare Their Post-FOMC Rally

AUSSIE BONDS

ACGBs (YM flat & XM flat) sit flat and well off the Sydney session’s best levels as local participants digest the FOMC decision and Fed Chair Powell’s press conference. While post-FOMC dealing yesterday saw a material bull-steepening of the US tsy curve, some of those gains have been pared in today’s Asia-Pac session. Cash US tsys are dealing 3-5bps cheaper, with a flattening bias.

  • Locally, in addition to the previously outlined House Price and PMI data, the local calendar has shown better than expected Q4 Terms of Trade (Export Price Index +5.6% q/q vs +3.5% est. and Import Price Index +1.1% q/q vs +0.6% est.), weaker Q4 NAB Business Confidence (-6 vs -1 prior) and softer than expected December Building Approvals (-9.5% m/m vs +0.5% est.).
  • Cash ACGBs are flat, with the AU-US 10-year yield differential 7bps higher at +7bps.
  • Swap rates are flat.
  • The bills strip is little changed, with pricing -1 to +1.
  • RBA-dated OIS pricing is 1-2bps softer across meetings. A cumulative 60bps of easing is priced by year-end.

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