Little Changed, Looks To RBNZ Decision

ACGBs are little changed (YM -1.0 & XM flat) despite robust demand for Dec-34 supply with the weighted average yield of 0.73bp through prevailing mids and a cover ratio of 3.6250x. This outcome aligned with the recent trend of robust pricing observed at ACGB auctions.

• Lacking domestic catalysts, local participants have remained attentive to headlines leading up to the RBNZ Policy Decision at 03:00 BST.
• In Asia-Pacific trading, US tsys have experienced a bull steepening, with the 2-year yield decreasing by 6bp while the 10-year yield remained unchanged.
• Cash ACGBs are flat to 1bp richer with the AU-US 10-year yield differential +3bp at -4bp.
• Swap rates are flat to 1bp lower with the 3s10s curve 1bp steeper.
• The bills strip is little changed with pricing flat to +2.
• RBA dated OIS is 1-3bp softer across meetings with a 17% chance of a 25bp rate hike in June priced.
• Economists expect the 10-year bond yield to decrease to 3.50% by the end of the second quarter, according to the latest results of a Bloomberg News survey conducted from May 18 to May 23. (link)