Richer With US Tsys After FOMC Steady, ADP & ISM Miss
ACGBs (YM +9.0 & XM +12.0) are sharply richer after US tsys finished 14-21bps richer across the major benchmarks, with the belly leading the bid. US tsys firmed early after lower-than-expected ADP Private Jobs Data, with the bid extending as the ISM data printed softer than expectations.
- US tsys then added to the gains as the FOMC held rates steady. Chairman Powell noted that the Fed is going meeting by meeting and that they have come "very far" with the rate hiking cycle. FOMC dated OIS now price a terminal rate of 5.40% in January with ~70bps of cuts by September 2024.
- US Equities firmed and the US Dollar was moderately pressured.
- Cash ACGBs are 9-12bps richer, with the AU-US 10-year yield differential 5bps wider at +8bps.
- The cash ACGB 10-year yield is 4.81%, 13bps lower on the day, after touching 5.0% for the first time since 2011 yesterday.
- Swap rates are 8-11bps lower, with the 3s10s curve flatter.
- The bills strip has bull-flattened, with pricing +1 to +12.
- RBA-dated OIS pricing is 3-10bps softer across meetings, with Dec’24 leading. Terminal rate expectations are 6bps softer at 4.47% (+40bps by Aug’24).
- Today, the local calendar will see Trade Balance and Home Loan data.