Sharply Richer After A Dovish Hold From The RBA & An Overnight Rally In US Tsys

ACGBs (YM +10.0 & XM +12.5) are sharply higher after the recent rally in US tsys resumed following lower-than-expected JOLTS job openings data. US tsys finished the NY session 6-11bps richer, with the curve flatter.

• The US JOLTS report showed a 617k decline in job openings to 8.7m in October, much weaker than the market anticipated. The decline in job openings was the biggest monthly drop since May 2023 and marked the lowest level since 2021. Moreover, the ratio of openings/unemployed dropped to 1.34, the lowest since August 2021.
• Germany’s 10-year rate was down 11bps to 2.24% on dovish remarks from the ECB’s Schnabel, previously considered to be on the hawk.
• Cash ACGBs are 10-12bps richer, extending yesterday’s post-RBA decision rally. The AU-US 10-year yield differential is 3bps tighter at +13bps versus +19bps pre-RBA yesterday.
• Swap rates are 7-9bps lower, with EFPs little changed.
• The bills strip has bull-flattened, with pricing flat to +12.
• RBA-dated OIS pricing is 4-13bps softer for meetings beyond May’24. This brings the post-RBA softening across meetings to 5-18bps. The expected terminal rate drops to 4.37% from 4.42% yesterday.
• Today, the local calendar sees 3Q GDP.
• Also, the AOFM plans to sell A$700m of the 3.75% 21 April 2037 bond today.