Little Changed Despite US Tsys Extending Last Week’s Sell-Off

ACGBs (YM -1.0 & XM flat) are little changed despite an extension of last week’s sell-off in US tsys. Trading was, however, subdued ahead of Wednesday's CPI report and the FOMC minutes. US PPI on Thursday.

• While market movements were well contained, the US tsy 10-year yield rose to the highest since November (4.46%), before finishing 2bps higher at 4.42%. The US 2-year note finished 4bps higher at 4.79%.
• Fed Funds expectations indicate that the June meeting is almost evenly split between the likelihood of a rate cut and maintaining current rates. The first cut isn't fully priced until August, with just 63bps of cuts currently priced in for the entire year. Essentially, the market is divided between predicting either two or three rate cuts in total.
• Cash ACGBs are unchanged, with the AU-US 10-year yield differential 1bp wider at -23bps.
• Swap rates are flat to 1bp lower.
• The bills strip is flat to -1.
• RBA-dated OIS pricing is little changed across meetings. A cumulative 29bps of easing is priced by year-end.
• Today, the local calendar sees Westpac Consumer and NAB Business Confidence.
• Tomorrow, the RBNZ delivers its Policy Decision, with consensus unanimous in expecting the OCR to be left unchanged at 5.50%.