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AUSSIE BONDS: Slightly Richer Ahead Of January Jobs Report

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM +1.0 & XM +1.0) are slightly richer after US equities and US tsys recovered from early losses, though trading was rather muted. The January FOMC minutes showed that some participants eyed a precautionary end to QT earlier than markets anticipated.

  • The Financial Times reported that China’s holdings of US treasuries have fallen to the lowest level since 2009. Total holdings fell to US$759 billion, a decrease of US$57 billion in 2024.
  • The US 20Y Bond auction tailed by 1bp, a return to weak form after a strong prior sale in January.
  • Fed cut expectations ticked slightly higher, about 3bp for 2025.
  • Cash ACGBs are1-2bps richer with the AU-US 10-year yield differential at -2bps.
  • Swap rates are 1-2bps lower.
  • The bills strip is little changed.
  • The local calendar will see January jobs data today, with +20k jobs and an unemployment rate of 4.1%, +0.1ppt, expected.
  • On Tuesday, RBA Governor Bullock noted the labour market’s unexpected strength and cautioned that market expectations for further rate cuts are not guaranteed.
  • RBA-dated OIS pricing is 1-7bps firmer than yesterday’s pre-RBA levels, with mid-2025 leading the rise.  A 25bp rate cut in April is given a 14% probability, with a cumulative 45bps of easing priced by year-end. 
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ACGBs (YM +1.0 & XM +1.0) are slightly richer after US equities and US tsys recovered from early losses, though trading was rather muted. The January FOMC minutes showed that some participants eyed a precautionary end to QT earlier than markets anticipated.

  • The Financial Times reported that China’s holdings of US treasuries have fallen to the lowest level since 2009. Total holdings fell to US$759 billion, a decrease of US$57 billion in 2024.
  • The US 20Y Bond auction tailed by 1bp, a return to weak form after a strong prior sale in January.
  • Fed cut expectations ticked slightly higher, about 3bp for 2025.
  • Cash ACGBs are1-2bps richer with the AU-US 10-year yield differential at -2bps.
  • Swap rates are 1-2bps lower.
  • The bills strip is little changed.
  • The local calendar will see January jobs data today, with +20k jobs and an unemployment rate of 4.1%, +0.1ppt, expected.
  • On Tuesday, RBA Governor Bullock noted the labour market’s unexpected strength and cautioned that market expectations for further rate cuts are not guaranteed.
  • RBA-dated OIS pricing is 1-7bps firmer than yesterday’s pre-RBA levels, with mid-2025 leading the rise.  A 25bp rate cut in April is given a 14% probability, with a cumulative 45bps of easing priced by year-end.