Slightly Weaker Despite Slightly Richer US Tsys On Friday

ACGBs (YM -2.0 & XM -2.5) are slightly weaker after US tsys experienced a relatively subdued yet positive Friday session. The 2-year yield closed down 4bps at 5.0%, while the 10-year bond finished little changed at 4.83.

• Conversely, global equities wrapped up the week on a cautious note, marked by concerns over geopolitical tensions and a somewhat lacklustre corporate earnings season, which collectively dampened market sentiment. The S&P500 closed 0.5% lower, pushing into correction territory as it registered a drop of more than 10% from its recent peak.
• The latest EPFR fund flows data revealed weekly allocations into long-dated US sovereign debt funds were the highest on record.
• Looking ahead, the markets brace for the FOMC, BOJ, and BOE policy meetings this week. Although no substantial changes in policy are anticipated at these meetings, their potential to influence the market still looms large. Notably, there is a level of uncertainty surrounding the possibility of the BOJ making further adjustments to its yield curve control.
• Cash ACGBs are 2bps cheaper, with the AU-US 10-year yield differential 5bps higher at flat.
• Swap rates are 2-3bps higher.
• The bills strip has bear-steepened, with pricing -1 to -3.
• RBA-dated OIS pricing is flat to 3bps firmer across meetings.
• Today, the local calendar sees Retail Sales.