Sharply Richer As Market Digests Hamas/Israel Conflict

ACGBs (YM +8.0 & XM +5.0) are sharply higher, but off early Sydney session highs after the market digests news of the Hamas/Israel conflict. US tsy futures have spiked as high as 107-20+, +0-25 from NY closing levels in early Asia-Pac dealings. It is currently 107-12.

• (AFR) "Investors are braced for a possible oil price spike and greater geopolitical uncertainty from Israel’s “long and difficult war” with Hamas following the Palestinian militant group’s bloody weekend incursions into Israel." (See link)
• Today’s moves come after US nonfarm payrolls easily beat expectations at the end of last week resulting in a notable move higher in US tsy yields. Other parts of the report were more mixed, which helped unwind the initial knee-jerk spikes in tsy yields. Dip buyers, short covering, and technical buying ahead of the Columbus Day long weekend helped trim bond losses.
• The 10-year had finished 8bps cheaper at 4.80% on Friday after making a fresh cycle high of 4.885%. A reminder cash tsys are closed today and will limit liquidity in the space.
• Cash ACGBs are 5-8bps richer.
• Swap rates are 3-5bps lower, with EFPs 3bps wider.
• The bills strip has bull-flattened, with pricing +1 to +7.
• RBA-dated OIS pricing is 2-6bps softer across meetings, with Dec’24 leading.
• Today, the local calendar sees Foreign Reserves data.