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Holding Cheaper, Consumer Sentiment Falls In March

AUSSIE BONDS

ACGBs (YM -1.0 & XM -3.5) are holding in negative territory after dealing in relatively narrow ranges in today’s Sydney session. The domestic calendar has been light, with March’s Consumer Confidence Index as the sole release. Consumer Sentiment fell 1.8% m/m, with the Buy Major Household Item sub-index -2.9% m/m.

  • Consumer Sentiment remains above January’s level though. Through the volatility, the series has turned up as the RBA now seems firmly on hold, but it remains at depressed levels and improvement in sentiment is slow. Westpac notes that consumers remain “deeply pessimistic” and are more concerned about the economy, thus weak consumption is likely to persist for now.
  • Cash ACGBs are 1-3bps cheaper, with the AU-US 10-year yield differential unchanged at -19bps.
  • Swap rates are 1-2bps higher, with the 3s10s curve steeper.
  • The bills strip has bear-steepened, with pricing flat to -2.
  • RBA-dated OIS pricing is slightly mixed. A cumulative 41bps of easing is priced by year-end.

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