Richer With US Tsys, FOMC Decision & US Refunding Plans In Focus

ACGBs (YM +4.0 & XM +5.5) are richer after US tsys rally with EGBs after recent dovish comments from several ECB officials. The 10-year Bund yield fell 6bps to 2.23%, while US tsys richened 3-6bps across benchmarks on Monday. Market participants await quarterly earnings reports and the FOMC Policy Decision.

• Overnight, the Treasury cut Jan-March borrow estimates from $816B to $760B and estimates April-June at $202bn. The refunding announcement is scheduled for Wednesday.
• The focus remains on the timing of the first FOMC rate cut since March 2020 in the lead-up to this Wednesday's policy announcement. No action is expected from the Fed Wednesday, but dealer estimates of when and by how much is varied (GS: 25bp cut in March, 5 total cuts in 2024 to 4.25%; DB 3.75% by year-end, UBS 2.75% year-end; flipside: Santander estimate is 50bp by year-end to 5%).
• Cash ACGBs are 4-5bps richer, with the AU-US 10-year yield differential unchanged at +9bps.
• Swap rates are 3-5bps lower, with the 3s10s curve flatter.
• The bills strip has bull-flattened, with pricing +1 to +3.
• RBA-dated OIS pricing is 2-4bps softer across meetings beyond March.
• Today, the local calendar sees December Retail Sales. The week’s main focus however is likely to be the Q4 CPI print tomorrow, which comes before next week's RBA meeting.