Little Changed & Near Cheaps, PPI Data & May-34 Supply Tomorrow

ACGBs (YM -1.0 & XM +0.5) sit little changed and near Sydney session cheaps as US tsys pare yesterday’s post-FOMC rally in today’s Asia-Pac session. Cash US tsys are dealing 1-4bps cheaper, with a flattening bias.

• Market commentators have started to push back their forecast for Fed cuts. Fed Chair Powell yesterday said policymakers were unlikely to pivot to rate cuts in March. Goldman Sachs has pushed back its forecast for the 1st Fed cut to May from March. They still expect 5 cuts this year (BBG). Aberdeen sees the Fed cutting rates three times this year (BBG). This may be lending support to today's US tsy moves.
• Today’s local data drop of House Prices, PMI, Terms of Trade, NAB Business Confidence and Building Approvals failed to be market-moving.
• Cash ACGBs are 1-2bps richer, with the AU-US 10-year yield differential 6bps higher at +6bps.
• Swap rates are flat to 2bps lower, with the 3s10s curve flatter.
• The bills strip has twist-flattened, with pricing -1 to +2.
• RBA-dated OIS pricing is 1-2bps softer across meetings. A cumulative 61bps of easing is priced by year-end.
• Tomorrow, the local calendar sees PPI and Home Loans data.
• Tomorrow, the AOFM plans to sell A$800mn of 3.75% 21 May 2034 bond.