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Holding Cheaper, RBA Bullock’s Senate Testimony & Jobs Report Tomorrow

AUSSIE BONDS

ACGBs (YM -11.0 & XM -10.0) are cheaper and not too far from Sydney session lows. With the local calendar empty apart from ACGB weekly supply, local participants have been content to track US tsys in today’s Asia-Pac session following yesterday’s aggressive post-CPI sell-off. Cash US tsys are currently dealing flat to 3bp richer, with the benchmark curve steeper.

  • The latest round of ACGB Dec-30 supply prices comfortably through mids but with a relatively modest cover ratio of 2.7125x.
  • Cash ACGBs are 9-11bps cheaper, with the AU-US 10-year yield differential 4bps lower at -4bps.
  • Swap rates are 9-11bps higher, with the 3s10s curve flatter.
  • The bills strip has sharply bear-steepened, with pricing -1 to -11.
  • RBA-dated OIS pricing is 6-9bps firmer for meetings beyond June. A cumulative 28bps of easing is priced by year-end.
  • Tomorrow's local calendar is busy, starting with RBA Bullock's Senate Testimony, followed by the release of January's Employment Report and February's Consumer Inflation Expectation data.
  • Given December’s large 65.1k drop, attention will be on whether labour demand is still strong enough to unwind most of that move. Bloomberg consensus is forecasting a 25k rise in new jobs with the unemployment rate ticking up 0.1pp to 4%. The latter hasn’t started with a ‘4’ since February 2022.

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