Holding Sharply Cheaper AS US Tsys Extend Sell-Off In Asia-Pac Dealings

ACGBs (YM -11.0 & XM -8.0) are holding in sharply cheaper territory but slightly above the Sydney session’s worst levels. In the absence of domestic drivers, it has been all about the post-FOMC sell-off in US tsys led by the short end.

• TYZ3 has breached Wednesday’s post-FOMC lows as Asia-Pac participants digest the Fed’s hawkish hold. TYZ3 support now comes in at 107-23, 1.236 projection of the Jul 18-Aug 4- Aug 10 price swings. Cash US tsys sit 1-3bps cheaper across the major benchmarks.
• Cash ACGBs are 9-10bps cheaper, with the AU-US 10-year yield differential at -13bps.
• The swaps curve has flattened, with rates 6-8bps higher and EFPs tighter.
• The bills strip has bear-steepened, with pricing -5 to -11.
• RBA-dated OIS pricing is 6-12bps firmer for '24 meetings, with Nov'24 leading.
• (AFR) New Reserve Bank of Australia governor Michele Bullock risks losing control of interest rates to outsiders on the board, under a “radical” recommendation accepted by the government, former RBA boss Ian Macfarlane has warned. (See link)