RBA Lowe Fails to Deliver Fireworks

Bond futures move off session lows as RBA Governor Lowe successfully deflects criticism about last week’s private banker briefing at today’s Senate Hearing and fails to use the opportunity to deliver a message more hawkish than the one contained in last week’s RBA statements. YM and XM managed to claw back much of the morning’s losses by the Senate Hearing’s mid-session break to be -3.0 after being down as much as -10.0. Cash ACGBs also saw yields pullback from the morning highs to be only up 2.5bp out to the 10-year zone and are close to flat for 15-30yr, benchmarks.

• Swaps scaled back some of the morning’s rise in rates too but were still 5bp higher across the curve.
• The AU-US 10-year yield differential narrowed to ~4bp from a morning high of 6bp.
• Bills were 1-2bp up from session lows with June bills -5.0 and the reds -9.0.
• Immediate RBA-dated OIS is little changed, attaching a 92% chance of a 25bp hike at the March meeting. Terminal rate expectations however reversed the morning’s push higher to 4.20% for Sep/Oct-23 to be back at 4.16%.
• The AOFM successfully sells A$700mn of ACGB Apr-33 with the weighted average yield 1.32bp through prevailing mids (per Yieldbroker), with a cover ratio topping 4.00x.