Sitting Weaker, Off Cheaps, Awaiting RBA Decision

ACGBs sit weaker (YM -5.0 & XM -4.0), but off session cheaps, ahead of the RBA Policy Decision today (0530 BST). A slight richening in Us tsys in Asia-Pac trade has assisted ACGBs move away from session lows.

• The RBA is expected to leave the cash rate at 3.60% at its policy decision meeting after Q1 core CPI undershot expectations. The focus is likely to be on the tone of the statement and whether there is some indication of updated forecasts. RBA Governor Lowe will speak after the meeting (1220 BST).
• RBA dated OIS is flat to 4bp firmer across meetings with a 15% chance of a 25bp hike priced for today's meeting. Terminal rate expectations (August) sit at 3.72% for a cumulative tightening of 15bp.
• Cash ACGBs are 4bp cheaper with the AU-US 10-year yield differential -5bp at -16bp.
• Swap rates are 4-5bp higher with the 3s10s curve 1bp steeper.
• The bills strip is steeper with pricing -2 to -5.
• Elsewhere, more information is trickling out regarding the May 9 budget. The government is focused on providing cost-of-living relief while not providing fiscal stimulus that adds to inflation. It continues to talk about providing a responsible budget – The Australian.