Richer & At Sydney Session Highs Post-Data, Data Disappoints

ACGBs (YM +4.0 & XM +4.0) are richer and at Sydney session highs after today’s domestic data drop undershoots expectations.

• Building approvals rose 1.9% m/m (estimate +3.4%) in March versus a revised -0.9% in February. Private-sector home approvals rose 3.8% m/m versus a revised +12.4% in February.
• The trade surplus narrowed to A$5.024bn (estimate +A$7.300bn) in March from a revised +A$6.591bn in February.
• Slightly richer cash US tsys in today’s Asia-Pac session has likely assisted the move away from session lows.
• Cash ACGBs are 4bps richer, with the AU-US 10-year yield differential 2bps higher at -15bps.
• Swap rates are 4bps lower.
• The bills strip has extended its bull-flattening post-data, with pricing flat to +5.
• RBA-dated OIS pricing is 2-4bps softer for meetings beyond September. The expected terminal rate sits at 4.45%.
• (Dow Jones) There is a good argument that says the Reserve Bank of Australia has been far too timid in raising interest rates given that large swathes of the economy are still going strong, according to a former senior manager at the central bank. (See link)