Richer After Trading Resumes After Australia Day, US Tsys Cheaper on Friday

ACGBs (YM flat & XM +0.5) are slightly richer after Sydney trading resumed after Friday’s Australia Day holiday. On Friday, US tsys closed the week with a small yield lift. It was a busy session, with US tsys cheapening after PCE and Personal Spending data: PCE Deflator m/m (0.2% vs. 0.2% est, -0.1% prior), y/y (2.6% vs. 2.6% est); PCE Core Deflator m/m (0.2% vs. 0.2% est), y/y (2.9% vs. 3.0% est). Personal Spending higher than expected with up-revisions to prior: 0.7% vs. 0.5% est, prior upped to 0.4% from 0.2%; and Real Personal Spending: 0.5% vs. 0.3% est.

• The S&P 500 was -0.1% on Friday, breaking a string of 6 straight gains. And the NASDAQ slipped 0.4%.
• Cash ACGBs are 3-5bps richer relative to Thursday’s close, with the AU-US 10-year yield differential 2bps lower at +7bps.
• Swap rates are 2-3bps lower, with the 3s10s curve steeper.
• The bills strip is little changed, with price movements bounded by +/-1.
• RBA-dated OIS pricing is flat to 4bps softer across meetings, with December leading. A cumulative 42bps of easing is priced by year-end.
• The local calendar is empty today, with Dec retail sales out tomorrow. The main focus will be Wednesday's CPI print for Q4, which comes before next week's RBA meeting.