Slightly Richer, US Tsys Finish With Small Gains After PCE Deflator Data

ACGBs (YM +1.0 & XM +1.5) are slightly stronger after US tsys ground out a small richening (1-2bps richer) following the release of US PCE Deflator data. The market breathed a sigh of relief on the PCE inflation data, which printed in line with market expectations. The US 10-year yield finished 1bp lower at 4.26% after pushing as high as 4.32% ahead of the PCE deflator data.

• Initial Jobless Claims were higher than expected (215k vs. 210k est).
• Fed speak remained balanced while leaning toward cut(s) in 2H'24. Fed Bostic reiterated that the central bank is likely going to be in a position to begin easing interest rates sometime in the summer, but he added that economic data will be the guide and easing can be pulled forward or pushed back.
• Cash ACGBs are 1-2bps richer, with the AU-US 10-year yield differential 1bp higher at -13bps.
• Swap rates are 1bp lower.
• The bills strip is slightly richer, with pricing flat to +2.
• RBA-dated OIS pricing is little changed apart from the September meeting that is 5bps firmer. A cumulative 38bps of easing is priced by year-end.
• Today, the local calendar shows CoreLogic House Prices and Judo Bank PMI Mfg data.
• The AOFM also plans to sell A$800 million of 3.75% May-34 bond.