Off Cheaps After Pricing Of New Dec-34 ACGB

ACGBs sit weaker (YM -6.0 & XM -2.0) but well off session lows seen ahead of the pricing of A$14bn of the new ACGB Dec-34 via syndication. A$61bn in bids were received at the final clearing price, pointing to more than ample demand.

• Cash ACGBs are 1-5bp cheaper on the day but 3-4bp better than worst levels with the 3/10 curve 3bp flatter.
• The AU-US 10-year yield differential is +3bp at -9bp, after touching -6bp before the pricing of the new Dec-34 bond.
• Swap rates are 1-5bp higher with EFPs little changed.
• Bills pricing is -3 to -6 with late whites the weakest.
• RBA dated OIS is 4-6bp firmer for meetings beyond July with 21bp of cumulative tightening priced for August.
• A Bloomberg News survey of 41 economists revealed an expectation that the Australian economy will expand by 1.7% in 2023, 1.6% in 2024 and 2.4% in 2025. The chance of recession happening over the next 12 months is 35%, according to 17 economists. The RBA cash is seen at 3.85% by end-2023.
• With the local calendar light for the remainder of the week, the local market will be guided by US Tsys as they navigate the US earnings season.