Richer, Awaiting Cash Tsys After Memorial Day Holiday

ACGBs are richer (YM +4.0 & XM +4.0) as US tsy futures strengthen on light volume on Monday. Cash tsys will resume trading after the Memorial Day holiday today with the market likely focused on the passage of a debt-ceiling bill after a bipartisan agreement that was reached on Saturday.

• Traders will also be confronted with mounting expectations that the Federal Reserve is likely to raise interest rates again in June or July. FOMC dated OIS closed on Monday with a cumulative 25bp of tightening priced by July.
• Cash ACGBs opened 4bp richer.
• Swap rates are 4bp lower with the 3s10s curve 1bp flatter.
• The bill strip is flatter with pricing flat to +5.
• RBA dated OIS opened 1-4bp softer for meetings beyond July.
• The local calendar sees April Building Approvals released today. Overall, an increase in non-high-rise constructions is expected to contribute to a 2% m/m rise in total dwelling approvals. However, the high-rise sector remains uncertain and poses a significant variable in the equation.
• However, the focus of the week is likely to be RBA Lowe’s appearance and April CPI monthly data tomorrow. BBG consensus expects the annual rate to uptick to 6.4%, with a range of 6.1% to 6.6%, from 6.3% in March.