Richer, Building Approvals Data Misses

ACGBs are richer (YM +5.0 & XM +3.5) as April Building Approvals data unexpectedly weaken. Building approvals fell 8.1% m/m (estimate +2.0%) in April versus revised -1.0% in March. Private-sector home approvals fell 3.8% m/m versus a revised -3.7% in March. “Total dwellings approved fell to the lowest level since April 2012”, according to the ABS. There has been a small positive market reaction to the data.

• Cash ACGBs are 4-5bp richer on the day with the AU-US 10-year yield differential at -10bp.
• Swap rates are 4bp lower with EFPs wider.
• The bills strip has twist flattened with pricing -1 to +8.
• RBA-dated OIS pricing is 1-5bp softer for meetings beyond July.
• James Glynn (Dow Jones) writes that Australian consumer confidence is at its worst since 1990 when the economy was heading into a deep recession that threw thousands out of work and devastated small businesses, with the economy taking years to recover. (link)