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AUSSIE BONDS: Slightly Richer After MYEFO Ahead Of FOMC

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM +1.0 & XM +1.0) are slightly richer after the release of the Federal Government’s MYEFO.

  • There are few changes to the economic forecasts with them focused on the current financial year reflecting actual data outcomes. The deficit in FY25 has been revised slightly lower but remains at 1% of GDP. However, the subsequent years are showing a worse deficit trajectory and as a result higher debt ratios.
  • From FY26 the deficit is now forecast to be larger. FY26 has been revised up 0.1pp to 1.6% of GDP, FY27 0.4pp to 1.3% and FY28 0.2pp to 1.0%. This is predominantly due to policy decisions with them accounting for around 80% of the aggregate $21.7bn deterioration in the budget to FY28.
  • The headline inflation outlook is unchanged at 2.75% in FY25 and FY26 but wage increases have been revised lower.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session ahead of today's FOMC policy decision.
  • Cash ACGBs are 1-3bps richer with the 3/10 curve steeper and the AU-US 10-year yield differential at -10bps.
  • The bills strip is slightly richer, with pricing +1 to +3.
  • RBA-dated OIS pricing shows a 25bp rate cut more than fully priced by April (118%).
  • Tomorrow, the local calendar will see Consumer Inflation Expectations data.
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ACGBs (YM +1.0 & XM +1.0) are slightly richer after the release of the Federal Government’s MYEFO.

  • There are few changes to the economic forecasts with them focused on the current financial year reflecting actual data outcomes. The deficit in FY25 has been revised slightly lower but remains at 1% of GDP. However, the subsequent years are showing a worse deficit trajectory and as a result higher debt ratios.
  • From FY26 the deficit is now forecast to be larger. FY26 has been revised up 0.1pp to 1.6% of GDP, FY27 0.4pp to 1.3% and FY28 0.2pp to 1.0%. This is predominantly due to policy decisions with them accounting for around 80% of the aggregate $21.7bn deterioration in the budget to FY28.
  • The headline inflation outlook is unchanged at 2.75% in FY25 and FY26 but wage increases have been revised lower.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session ahead of today's FOMC policy decision.
  • Cash ACGBs are 1-3bps richer with the 3/10 curve steeper and the AU-US 10-year yield differential at -10bps.
  • The bills strip is slightly richer, with pricing +1 to +3.
  • RBA-dated OIS pricing shows a 25bp rate cut more than fully priced by April (118%).
  • Tomorrow, the local calendar will see Consumer Inflation Expectations data.