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Richer, Narrow Ranges, RBA On Hold Next Tuesday

AUSSIE BONDS

In today's Sydney session, ACGBs (YMU4 +5.0 & XMU4 +3.9) hold richer after dealing in relatively narrow ranges. With the domestic calendar light, any extension of overnight gains has been held back by today’s 1-2bps cheapening in cash US tsys in today’s Asia-Pac session.

  • Cash ACGBs are 4-5bps richer, with the AU-US 10-year yield differential at -11bps.
  • Swap rates are 4-5bps lower.
  • The bills strip has bull-flattened, with +2 to +7.
  • On Monday, the local calendar will see ANZ-Indeed Job Advertisements, ahead of the RBA Policy Decision on Tuesday.
  • (Dow Jones) “The Reserve Bank of Australia will take another cautious step into the unknown at its June policy meeting next week, deliberating on a mixed economic picture of growth barely registering a pulse against a backdrop of still-stubborn inflation risks.” (See link)
  • According to all economists polled by Reuters, the RBA will hold its key policy rate for a fifth straight meeting on Tuesday due to" persistent price pressures". A majority, however, "expected the first cut to come in the last quarter of the year".
  • RBA-dated OIS pricing is 3-6bps softer for 2025 meetings. A cumulative 12bps of easing is priced by year-end.
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