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AUSSIE BONDS: Sharply Weaker As FOMC & Infl Exps Weigh

AUSSIE BONDS
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ACGBs (YM -14.0 & XM -13.0) are sharply weaker and at Sydney session lows.

  • Following a negative lead from US tsys in the wake of yesterday’s hawkish FOMC statement, dot plot, and press conference, the local market extended its decline after today’s data. This move was driven by the Melbourne Institute’s measure of consumer inflation expectations, which rose to 4.2%, the highest level since September. This uptick follows a drop to 3.8% in November, marking the first time inflation expectations had fallen below 4% since August 2021.
  • The Australian economy is expected to log an annual growth rate of 1.1% in 2024, down from a previous projection of 1.4%: ANZ. (per MT Newswires)
  • Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session after yesterday’s aggressive post-FOMC sell-off.
  • Cash ACGBs are 13bps cheaper with the AU-US 10-year yield differential at-11bps.
  • Swap rates are 12-13bps higher.
  • The bills strip is sharply cheaper, with pricing beyond the first contract (-4) at -9 to -15.
  • RBA-dated OIS pricing is 1-11bps firmer, with late 2025 leading. A 25bp rate cut is still fully priced by April.
  • Tomorrow, the local calendar will see Private Sector Credit data alongside the AOFM’s planned sale of A$700mn of the 2.25% 21 May 2028 bond. 
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ACGBs (YM -14.0 & XM -13.0) are sharply weaker and at Sydney session lows.

  • Following a negative lead from US tsys in the wake of yesterday’s hawkish FOMC statement, dot plot, and press conference, the local market extended its decline after today’s data. This move was driven by the Melbourne Institute’s measure of consumer inflation expectations, which rose to 4.2%, the highest level since September. This uptick follows a drop to 3.8% in November, marking the first time inflation expectations had fallen below 4% since August 2021.
  • The Australian economy is expected to log an annual growth rate of 1.1% in 2024, down from a previous projection of 1.4%: ANZ. (per MT Newswires)
  • Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session after yesterday’s aggressive post-FOMC sell-off.
  • Cash ACGBs are 13bps cheaper with the AU-US 10-year yield differential at-11bps.
  • Swap rates are 12-13bps higher.
  • The bills strip is sharply cheaper, with pricing beyond the first contract (-4) at -9 to -15.
  • RBA-dated OIS pricing is 1-11bps firmer, with late 2025 leading. A 25bp rate cut is still fully priced by April.
  • Tomorrow, the local calendar will see Private Sector Credit data alongside the AOFM’s planned sale of A$700mn of the 2.25% 21 May 2028 bond.