Holding Weaker, Awaits Federal Budget Tomorrow

ACGBs are weaker (YM -10.0 & XM -7.0) but off session cheaps. The release of the April NAB business survey and March building approvals data failed to provide a meaningful local catalyst. Business confidence rose 1pt to flat while business conditions dropped to +14 from +16 in March. Building approvals data undershot expectations with a decline of 0.1% m/m in March (+3.0% est.) following a revised +3.9% in February.

• Without meaningful macro news flow US tsys are little changed in Asia-Pac trade.
• Cash ACGBs are 7-10bp weaker but off the worst levels set in morning trade (10-13bp cheaper). The 3/10 cash curve is 3bp flatter with the AU-US 10-year yield differential +2bp at -4bp.
• The swaps curve is 2bp flatter with rates 5-7bp higher on the day. EFPs are 2bp tighter.
• The bills strip is steeper but with pricing off session cheaps at -3 to -11.
• RBA dated OIS pricing is 5-9bp firmer for meetings beyond October with early'24 leading.
• Treasurer Chalmers is slated to hand down the Federal Budget tomorrow. If it turns out to be significantly expansionary then RBA rate expectations may be affected. BBG consensus expects a A$5.35bn deficit, 0.25% of GDP for FY23.