Little Changed Despite US Tsy Bull Steepening On Friday, BOJ YCC Tweak Fears Weighing

ACGBs (YM flat & XM -0.5) are little changed despite US tsys having benefited from risk-off and haven flows ahead of the weekend due to an intensification of the Israel-Hamas war. However, it is worth noting that US tsys finished off best levels after the release of two US citizens held hostage in Gaza and the US pushed Israel to delay its invasion.

• On Friday, the US tsy curve bull-steepened, with the 2-year yield 9bps lower to 5.07%. The 10-year fell 8bps to 4.91%, with the cycle high still at 5%.
• US tsy futures have opened the week softer, TYZ3 dealing at 105-26, -0-06 compared to NY closing levels. A Nikkei report that the BOJ may consider further tweaking its YCC settings is weighing on the space in early trade.
• Cash ACGBs are flat, with the AU-US 10-year yield differential +3bps at -16bps ahead of cash US tsys Asia-Pac opening.
• Swap rates are little changed.
• The bills strip is slightly richer, with pricing flat to +2.
• RBA-dated OIS pricing is flat to 2bps softer across meetings.
• The local calendar is empty today, ahead of Judo Bank PMI data and RBA Governor Bullock’s speech at CBA’s Annual Conference tomorrow. This week’s highlight, however, is likely to be Q3 CPI data on Wednesday.