Off Cheaps Ahead Of Chinese Data

ACGBs are weaker but well off session lows (YMM3 -3.8 & XMM3 0.0) with cash U.S Tsys twist flattening as Asia-Pac assesses yesterday’s US CPI print and digests several days of market turbulence associated with the collapse of Silicon Valley Bank (SVB). Cash ACGB curve bear flattens 3bp with the 10-year benchmark yield unchanged after revisiting Monday’s close (+8bp) before moving to session lows as U.S. Tsys strengthened. The 3-year benchmark yield is 5bp higher. AU/US 10-year yield differential is -10bp at -22bp.

• Swaps rebound from session cheaps with rates 1-5bp higher and the 3/10 EFPs box 5bp steeper.
• In part contributing to heaviness at the short end of the ACGB curve has been the market’s reassessment of sorts of the end of the tightening cycle priced yesterday.
• RBA dated OIS has softened 5-15bp across meetings with April returning to pricing a tightening, albeit small (16% chance of a 25bp hike).
• While only a cautious move to reinstate tightening cycle pricing, it is still noteworthy ahead of employment data tomorrow.
• The market’s attention is now likely to shift to China which is slated for a raft of monthly (Jan/Feb) releases including Retail Sales and Industrial Production.