Sharply Richer, US Tsys Extend Gains Recent Dealings, Local Data Softer

ACGBs (YM +12.0 & XM +15.0) are sharply richer and at Sydney session highs. The move reflects the very strong lead-in from the NY session where US tsys rallied 14-21bps. That move has extended in today’s Asia-Pac session, with yields ~2bp lower across benchmarks as local participants digested Fed Chair Powell’s remark that the Fed had come “very far” with the rate hiking cycle.

• On the domestic data front, the merchandise trade surplus narrowed in September to its lowest since March 2021. It fell $3.37bn on the month to $6.79bn due to a strong increase in imports. The data are nominal and so are also impacted by moves in trade prices, especially for commodities. They also now exclude services. Strong Q3 capex and consumption imports signal solid H2 domestic demand.
• Meanwhile, new home loan values in September rose a slightly less-than-expected 0.6% m/m to be still down 4.7% y/y but up from -9.3%.
• Cash ACGBs are 11-15bps richer, with the AU-US 10-year yield differential 4bps wider at +8bps.
• Swap rates are 11-15bps lower, with the 3s10s curve flatter.
• The bills strip has bull-flattened, with pricing +1 to +15.
• RBA-dated OIS pricing is 3-10bps softer across 2024 meetings, with Dec’24 leading.