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Richer, US Tsys Richer After Weak ISM, Heavy Local Calendar Today


ACGBs (YM +4.0 & XM +4.5) are richer after US tsys rallied ahead of the weekend. Friday’s round of US data was supportive of looser policy as inflation metrics cooled: lower than expected ISM Mfg (47.8 vs. 49.5 est), Prices Paid (52.5 vs. 53.2 est) and New Orders (49.2 vs. 52.7 est); as well as U. of Mich. Sentiment (76.9 vs. 79.6 est).

  • US data resumes on Tuesday with S&P Global US Services PMI, ISM Services, Factory and Durable Goods Orders.
  • Elsewhere, the BoC is widely expected to keep rates on hold at 5% on Wednesday after it crucially removed a line on being prepared to raise rates further if needed at its January meeting. The ECB is also expected to hold its cash rate steady at 4.5% on Thursday. Eurozone core inflation fell to 3.1% on Friday, a seventh successive monthly fall.
  • Cash ACGBs are 3-4bps richer, with the AU-US 10-year yield differential 4bps higher at -7bps.
  • Swap rates are 4bps lower.
  • The bills strip has bull-flattened, with pricing flat to +4.
  • RBA-dated OIS pricing is flat to 4bps softer. A cumulative 39bps of easing is priced by year-end.
  • Today the Melbourne Institute inflation gauge for February, Q4 inventories/company profits, February ANZ job ads and January building approvals will be released.

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