Little Changed, Debt Ceiling Deal

ACGBs are weaker (YM -1.0 & XM +0.5) after news outlets reported a significant development in the form of a bipartisan agreement to suspend the debt limit for the next two years. This announcement was made on Saturday, but the real challenge lies ahead: gaining support from lawmakers on both sides of the aisle.

• US tsy futures are slightly weaker in early Asia-Pac trade. Cash tsys are closed today for the Memorial Day holiday.
• Cash ACGBs opened little changed with the AU-US 10-year yield differential at -8bp.
• The 3s10s swap has twist flattened with rates opening +1bp to -1bp.
• Bills pricing is flat to -2 across the strip.
• RBA dated OIS opened flat to 1bp firmer across meetings.
• RBA Governor Philip Lowe has used a briefing with government lawmakers to warn them that implementing generous wage rises for workers could worsen inflation, the Australian Financial Review reported, citing unidentified people familiar with the talks. (link)
• Australia’s barley sector may be the next beneficiary of the thawing relationship with Beijing, Trade Minister Don Farrell said following another meeting with his Chinese counterpart. (link)
• The local calendar is light today ahead of April Building Approvals tomorrow.
• The US and UK are closed. The focus of the week is likely to be RBA Lowe’s appearance and April CPI data on Wednesday.