Richer As US Tsys Extend Rally On Friendly Data, Heavy Local Calendar

ACGBs (YM +4.0 & XM +2.0) are richer after US tsys strengthened further, especially at the short end. The US tsy curve bull-steepened, with yields 7-9bps lower.

• The day’s moves in US tsys were initially influenced by subdued inflation data in Germany. This trend gained momentum as it found additional support from softer-than-anticipated core PCE inflation. Notably, these movements occurred despite an upward adjustment in real GDP growth, which was revised to an even more robust 5.2% annualised rate in Q3, up from the initial estimate of 4.9%.
• Fedspeak didn’t provide any pushback, with Bostic (’24) seeing evidence that tighter monetary policy is biting harder into economic activity and Mester (’24 voter retiring in June) reiterating she sees Fed policy on a good footing. The Beige Book then went on to show moderation compared to the mid-October update across output, pricing and labour markets.
• Cash ACGBs are 2-5bps richer, with the 3s10s curve steeper and the AU-US 10-year yield differential 1bp tighter at +9bps.
• The swaps curve has twist-steepened, with rates -3bps to +1bp.
• The bills strip is slightly richer, with pricing flat to +1.
• RBA-dated OIS pricing is little changed across meetings.
• Today, the local calendar sees Private Sector Credit, Private Capital Expenditure and Building Approvals data.