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Sharply Cheaper Post-RBA Minutes, US Tsys Extend Bear-Steepening In Asia-Pac Dealings


ACGBs (YM -14.0 & XM -9.5) sit sharply cheaper and at Sydney session lows. The weak performance can be attributed to both domestic and offshore factors.

  • On the domestic front, the minutes from the October RBA meeting showed that the Board had discussed both leaving rates unchanged and a 25bp hike but it felt that there hadn’t been “sufficient new information” to warrant tightening policy further. But November is clearly live as there will be updated forecasts and more data (Q3 CPI on October 25).
  • Abroad, US tsys have extended the bear-steepening observed in yesterday’s NY session into today’s Asia-Pac session. Cash US tsy yields are flat to 5bps higher in recent dealings, with the curve steeper.
  • Cash ACGBs are 9-13bps cheaper, with the AU-US 10-year yield differential unchanged higher at -19bps.
  • Swap rates are 10-13bps higher, with EFPs slightly wider.
  • The bills strip has sharply bear-steepened, with pricing -6 to -16.
  • RBA-dated OIS pricing is 4-15bps firmer across meetings, with terminal rate expectations 8bps firmer at 4.29%.
  • Tomorrow, the local calendar sees a Fireside chat with RBA Governor Bullock at the AFSA Annual Summit Panel.
  • The AOFM announced today that a new 4.75% Jun-54 bond had been issued via syndication and priced at a yield to maturity of 4.93%. The issue size was A$8bn.

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