Richer Ahead of RBA Policy Decision Tomorrow

ACGBs are richer (YM +2.0 & XM +3.5) after cash US tsys finished 6-11bp stronger across the curve in NY trade ahead of the weekend following some hopeful signs that services sector inflation was receding.

• Cash ACGBs are 2-3bp richer with the AU-US 10-year yield differential +2bp at -12bp.
• Swap rates opened 2-3bp lower with EFPs little changed.
• The bills strip has twist flattened with pricing -3 to +2.
• The RBA is expected to remain on hold at its policy decision meeting on Tuesday, taking advantage of the Q1 core CPI undershoot to assess the impact of the 350bp of tightening that has been delivered.
• RBA dated OIS opened 1bp softer to 4bp firmer across meetings with a 12% chance of a 25bp hike priced for tomorrow’s meeting.
• CoreLogic House Price has shown further signs of stabilisation In April by printing +0.7% M/M after +0.8% in March.
• The local calendar sees the release of April’s Judo Bank Mfg PMI, MI Inflation Gauge and ANZ Job Ads.
• Elsewhere, China’s Official Manufacturing PMI, released on Sunday, declined to 49.2 from 51.9 in March. The Non-Manufacturing PMI also fell to 56.4 from 58.2.
• The global calendar sees US ISM Manufacturing PMI slated for release today ahead of Wednesday’s FOMC policy decision. The ECB is scheduled to deliver its policy decision on Thursday.