Richer With US Tsys Ahead Of US CPI & FOMC Minutes

ACGBs (YM +4.0 & XM +6.0) are richer after US tsys finished the NY session stronger ahead of today’s US CPI data and FOMC Minutes. (See MNI U.S. CPI Preview: Apr 2024 - Key Framing Of Trends With June Cut Seen As A Coin Toss here).

• US yields finished 4-7bps lower, with the 2-year sliding 5bps to 4.74% and the 10-year dropping 6bps to 4.36%.
• In economic news, the NFIB survey of US small businesses showed optimism fell to 88.5, the lowest level in more than 11 years, after falling for seven of the past eight months.
• Oil dropped as traders assessed diplomatic efforts in the Middle East. Gold rose to a fresh record.
• Cash ACGBs are 3-6bps richer, with the AU-US 10-year yield differential 2bps lower at -25bps, just above the bottom of the range it has traded in since late 2022.
• Swap rates are 4-6bps lower, with the 3s10s curve flatter.
• The bills strip has bull flattened, with pricing flat to +4.
• RBA-dated OIS pricing is flat to 4bps softer across meetings, with late-24/early-25 leading. A cumulative 32bps of easing is priced by year-end.
• Today, the local calendar is empty apart from the AOFM’s planned sale of A$800mn of the 4.75% April 2027 bond.