Slightly Richer, BoJ Policy Decision The Regional Highlight Today

ACGBs (YM +2.0 & XM +1.0) are slightly richer after US tsys opened the week with a subdued data-light NY session. The Conference Board Leading Economic Index, which fell by less than expected in December (-0.1% m/m, -0.3% est. and -0.5% prior), was the sole release. It marked the first beat since August and is only the third beat for the past year.

• The market’s main focus this week is the estimate of Q4 GDP released on Thursday, followed by PCE Deflators on Friday.
• The AFR reported that Ed Yardeni said that an “exuberant melt-up phase” for US equities may be underway, adding that risks are rising fast too. The S&P 500 has risen more than 17.5% from its October low and the Nasdaq 100 has advanced more than 22% over the same time.
• Cash ACGBs are 1-2bps richer, with the AU-US 10-year yield differential 1bp wider at +11bps.
• Swap rates are 2-3bps lower.
• The bills strip is flat to +2.
• RBA-dated OIS pricing is slightly softer across meetings. A cumulative 38bps of easing is priced by year-end.
• Today, the local calendar sees NAB Business Confidence.
• Elsewhere, the BoJ Policy Decision is due today, with the prevailing consensus anticipating no changes in policy or forward guidance. (See MNI’s BoJ Preview here)