Holding Sharply Lower, US Tsys Weighing

ACGBs (YM -14.0 & XM -12.5) are holding sharply lower after the heavy lead-in from US tsys ahead of the weekend. While the local market has seen a raft of releases (PMIs, Inflation Gauge, Trade Balance and Job Ads), US tsys remain the key driver for ACGBs today.

• Cash US tsys are 4-7bps cheaper in today’s Asia-Pac session following Fed Chair Powell's appearance on 60 Minutes. This comes after the sell-off sparked by Nonfarm Payrolls on Friday.
• The Melbourne Institute’s inflation gauge has been stickier in coming down than headline inflation for the last year. The January reading moderated to 4.6% from 5.2%, helped by lower petrol prices, but remains above November’s 4.2%. MI’s trimmed mean measure eased to 4.4% from 5.2% but higher than November’s 3.8%.
• The trade surplus narrowed to A$10.959bn (estimate +A$10.500bn) in December from a revised +A$11.764bn in November.
• ANZ-Indeed job advertisements rose 1.7% from a month earlier in January.
• Cash ACGBs are 12-13bps cheaper, with the AU-US 10-year yield differential 7bps tighter at +3bps.
• Swap rates are 11-12bps higher.
• The bills strip has sharply bear-steepened, with pricing -4 to -15.
• RBA-dated OIS pricing is 6-13bps firmer for meetings beyond March ahead of tomorrow’s RBA Policy Decision. A cumulative 51bps of easing is priced by year-end.