Richer Despite Fedspeak Pushback Against Rate Cuts, Light Local Calendar

ACGBs (YM +3.0 & XM +5.6) have experienced a slight uptick in value as US tsys continued to adapt to the FOMC’s shift during Friday’s session. Despite efforts from Fed Williams and Bostic to temper the impact of Powell's pivot, expectations for rate cuts and the optimistic sentiment in the bond market saw only modest adjustments.

• The US Treasury 2-year yield surged by 10 basis points before settling 5 basis points higher at 4.44% by the end of Friday's trading. The 10-year yield also showed an initial increase but quickly retraced, ultimately finishing the week with minimal change at 3.91%, slightly above the weekly yield low.
• Implied Fed funds futures still reflect 19bps in easing by March, 63bps in cuts by June and 140bps for 2024.
• Cash ACGBs are 4-6bps richer, with the AU-US 10-year yield differential 2bps tighter at +17bps.
• Swap rates are 3-6bps lower, with the 3s10s curve flatter.
• The bills strip shows a mild bull-flattening, with pricing flat to +3.
• RBA-dated OIS pricing is flat to 4bps softer across meetings, with 53bps of easing priced by Dec’24.
• Today, the local calendar is empty, ahead of the RBA Minutes for the December Meetings tomorrow.