Richer, Mid-Range, Year-End Easing Expectations Back To 43bps

ACGBs (YM +3.0 & XM +3.0) are richer and sit in the middle of the Sydney session’s ranges. With the domestic calendar light today, local participants have been focused on US tsys after yesterday’s bounce back after two heavy days of selling. US tsys are ~1bps richer in today’s Asia-Pac session after finishing 4-7bps richer across benchmarks on Tuesday.

• The local market's movement today is also likely to have reflected the continuing digestion of yesterday’s less dovish RBA statement and a possible spillover from the sharp sell-off in NZGBs following stronger-than-expected Q4 Employment and Wages data.
• Cash ACGBs are 3bps richer, with the AU-US 10-year yield differential 1bp wider at +1bp.
• The latest round of ACGB Nov-28 supply saw the weighted average yield print 1.53bp through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.
• Swap rates are 2bps lower.
• The bills strip has slightly bull-flattened, with pricing flat to +3.
• RBA-dated OIS pricing is dealing mixed across meetings, with a cumulative 43bps of easing priced by year-end compared to 48bps going into yesterday’s decision.
• Nevertheless, terminal rate expectations have softened to 4.30% versus the prevailing effective cash rate of 4.32%.
• Tomorrow, the local calendar is empty.