Richer, Narrow Ranges, Awaiting US NFP

ACGBs (YM +3.0 & XM +4.0) remain richer after today’s economic data. Producer Prices rose 0.9% q/q (4.1% y/y) in 4Q versus +1.8% (3.8% y/y) in 3Q, while Home-Loan Values fell 4.1% m/m in December versus +1.0% est. and a revised prior of +0.7%.

• Ranges have been relatively narrow so far in the session as local participants await US Non-Farm Payrolls data later today.
• Cash US tsys are dealing 1bp richer across benchmarks in today’s Asia-Pac session, extending yesterday’s bull-flattening.
• Cash ACGBs are 3-4bps richer, with the AU-US 10-year yield differential 3bps wider at +9bps.
• The May-34 ACGB auction goes smoothly, with a cover ratio of 3.1125x. The more dovish assessment of the RBA’s policy outlook, combined with a still elevated outright yield, a steeper curve, a low level of issuance, and the line’s inclusion in the XM basket all look to have contributed to today’s bidding.
• Swap rates are 3-5bps lower.
• Bills are flat to +3, with the strip flatter.
• RBA-dated OIS pricing is 2-3bps softer for meetings beyond June, with a cumulative 63bps of easing priced by year-end.