Post-RBA Sell-Off Extends With Cheaper US Tsys Overnight

ACGBs (YM -7.0 & XM -5.5) are cheaper after US tsys continued to unwind the panicked haven trades seen on Friday and Monday. The cash tsy curve bear-steepened, with yields 5-11bps higher. The US 2-year briefly traded back above 4%, before closing +5.5bps at 3.98%. The US 10-year closed +10bps at 3.89%.

• Comments from the Fed's Daly that she does not see any labour market indicators flashing red assuaged recession fears. That supported dip buying in US equities. The NASDAQ and S&P 500 were up over 2% intraday.
• Five of the magnificent seven were higher, paced by Meta and Nvidia. Apple slid 1%, Alphabet unchanged.
• Cash ACGBs are 5-7bps cheaper on the day and 9-14bps cheaper than pre-RBA decision levels. The AU-US 10-year yield differential is 2bps wider at +18bps.
• Swap rates are 5-6bps higher.
• The bills strip has bear-steepened, with pricing -3 to -8.
• RBA-dated OIS pricing is 5-6bps firmer across meetings beyond September, with early 2025 leading. A cumulative 28bps of easing is priced by year-end.
• RBA Hunter, Assistant Governor (Economic), and RBA Cassidy, Deputy Head, Economic Analysis are currently appearing before the Senate Select Committee on the Cost of Living.
• Today, the AOFM plans to sell A$800mn of the 2.75% 21 June 2035 bond.