Richer, US Tsys Supported By Risk-Off & Weaker Data

ACGBs (YM +4.0 & XM +6.0) are richer after US tsys rallied 4-6bps across benchmarks, continuing the recent back and forth, ahead of Fed Chairman Powell's semi-annual policy testimony to Congress today and Thursday as well as NFP on Friday.

• Softer than expected ISM services and factory orders data underpinned the move lower in US tsy yields, erasing Monday's rise following more hawkish than expected comments from the Fed's Bostic.
• Risk-off sentiment also helped support US tsys as US equities tumbled, extending its recent slide, albeit from record or near record highs propelled by the AI frenzy.
• Six of the magnificent seven were lower. Adding to the negative sentiment, Apple’s iPhone sales in China slumped 24% in the first six weeks of the year according to independent research.
• Cash ACGBs are 4-6bps richer, with the AU-US 10-year yield differential flat at -12bps.
• Swap rates are 3-6bps lower.
• The bills strip has bull-flattened, with pricing flat to +4.
• RBA-dated OIS pricing is flat to 3bps softer across meetings. A cumulative 41bps of easing is priced by year-end.
• Today, the local calendar will see Q4 GDP. Also, the AOFM plans to sell A$800mn of 2.75% Nov-29 bond.