Sharply Stronger After A Massive Post-FOMC Bull-Steepening In US Tsys

ACGBs (YM +19.0 & XM +15.9) are sharply stronger after US tsys finished 13-30bps richer across benchmarks following the FOMC decision. Fed held the funds rate steady, acknowledging inflation has eased. However, the Fed Chair Powell reiterated the Fed is "prepared to tighten policy further, if appropriate".

• He added "Achieving a stance of monetary policy that is sufficiently restrictive to bring inflation sustainably down to 2% over time and to keeping policy restrictive until we're confident that inflation is on a path to that objective".
• FOMC-dated OIS for March fell 8.5bps to 5.108%, pricing in a cumulative 22.4bp of easing.
• Cash ACGBs are 17-19bps richer, with the AU-US 10-year yield differential 1bps wider at 10bps.
• Swap rates are 16-19bps lower, with the 3s10s curve steeper.
• The bills strip has bull-flattened, with pricing +10 to +25.
• RBA-dated OIS pricing is 7-22bps softer across meetings beyond Feb’24. 60bps of easing is priced by Feb’25.
• Today, the local calendar sees the November Employment Report. Bloomberg consensus expects +11.5k jobs, with an uptick in the unemployment rate to 3.8% from 3.7%.
• The AOFM has provided updated guidance on planned issuance of ACGBs in 2023-24. Based on MYEFO forecasts, the issuance of Treasury Bonds has been reduced to around A$50bn (of which $23.6 billion has been completed).