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AUSSIE BONDS: RBA Gov. Bullock Continues To Push Against Mkt Expns For Cuts

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM +2.0 & XM +1.0) are slightly stronger despite RBA Governor Bullock emphasising in her parliamentary testimony today that strong employment growth, while positive, could indicate underlying economic strength that might delay or disrupt disinflation.

  • ”We have not pre-committed to any particular course of action on interest rates. But in the forecasts published this week, the central projection suggests that if monetary policy is eased too quickly or by too much, disinflation could stall and inflation would settle above the midpoint of the target range. So the Board remains cautious about prospects for further policy easing."
  • Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +3bp.
  • Swap rates are 1-2bps lower.
  • The bills strip has bull-flattened, with pricing flat to +3.
  • RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in April is given a 10% probability, with a cumulative 44bps of easing priced by year-end.
  • On Monday, the local calendar is empty apart from the AOFM’s planned sale of A$300mn of the 4.25% 21 June 2034 bond.  The AOFM also plans to sell A$800mn of the 3.75% 21 April 2037 bond on Wednesday and A$700mn of the 1.75% 21 November 2032bond on Friday.     
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ACGBs (YM +2.0 & XM +1.0) are slightly stronger despite RBA Governor Bullock emphasising in her parliamentary testimony today that strong employment growth, while positive, could indicate underlying economic strength that might delay or disrupt disinflation.

  • ”We have not pre-committed to any particular course of action on interest rates. But in the forecasts published this week, the central projection suggests that if monetary policy is eased too quickly or by too much, disinflation could stall and inflation would settle above the midpoint of the target range. So the Board remains cautious about prospects for further policy easing."
  • Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +3bp.
  • Swap rates are 1-2bps lower.
  • The bills strip has bull-flattened, with pricing flat to +3.
  • RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in April is given a 10% probability, with a cumulative 44bps of easing priced by year-end.
  • On Monday, the local calendar is empty apart from the AOFM’s planned sale of A$300mn of the 4.25% 21 June 2034 bond.  The AOFM also plans to sell A$800mn of the 3.75% 21 April 2037 bond on Wednesday and A$700mn of the 1.75% 21 November 2032bond on Friday.