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Slightly Cheaper Despite Modest Rally By US Tsys

AUSSIE BONDS

ACGBs (YM -3.0 & XM -2.5) are slightly cheaper despite US tsys bull-flattening during the NY session. US yields finished flat to 3bps lower. US tsys had initially gapped significantly richer after lower-than-expected Retail Sales (-0.8% m/m vs. -0.2% est. and 0.6% prior), however, those gains were subsequently pared.

  • On the positive side, Initial Jobless Claims printed less than expected (212k vs. 220 est), while the volatile Empire Manufacturing Survey jumped from -43.7 to -12.5. The Philly Fed Business Outlook Index also recovered from -10.6 to +5.2.
  • Elsewhere, Bitcoin was holding above $US52,000, oil briefly rallied above $US83, gold edged above $US2000 and iron ore moved back towards $US130.
  • Like Japan, the UK economy was in a technical recession at the end of 2023, with GDP contracting by 0.3% in the three months to December. It had declined by 0.1% in Q3.
  • Cash ACGBs are 2bps higher, with the AU-US 10-year yield differential 2bps higher at -7bps.
  • Swap rates are 2-3bps higher, with EFPs little changed.
  • The bills strip is flat to -2.
  • RBA-dated OIS pricing is flat to 1bp firmer across meetings. A cumulative 38bps of easing is priced by year-end.
  • Today, the local calendar is empty.

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