Richer, Well Off Session Bests Ahead of FOMC Decision

ACGBs sit richer (YM +5.0 & XM +3.5) but off session bests as the local market mulls the RBA’s surprise 25bp hike yesterday, RBA Governor Lowe’s hawkish speech after market and stronger than expected retail sales. However, it's worth noting that liquidity was likely affected today due to cash tsys being closed until the London session, as Japan is observing a national holiday.

• RBA Kohler in her address to CEDA, text released on the RBA website, noted that Australia’s faster-than-expected population growth could have “unanticipated or more pervasive effects” on the economy. The market nudged a little lower on the release.
• Cash ACGBs are 4-6bp richer with the 3/10 curve 2bp steeper. The AU-US 10-year yield differential is +6bp at -1bp, after being -18bp ahead of the RBA decision.
• Swap rates are 3-5bp lower with EFPs 1bp wider.
• The bills strip is flatter with pricing +3 to +8.
• RBA dated OIS has softened by 2-8 basis points across meetings out to Feb'24, partially offsetting the firming yesterday. The market attaches a 14% chance of a 25bp rate hike at the RBA's June meeting, with a cumulative tightening of 10bp expected by August.
• The local calendar is slated to release March trade data tomorrow.
• Ahead of that, all eyes will turn to the FOMC decision later today.