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Slightly Weaker Despite U.S. Tsy Lead


ACGBs are slightly cheaper (YM -2.0 & XM -0.5) despite U.S. Tsy yields closing 8-11bp lower in trade ahead of the weekend after a downside miss for the core PCE deflator for February. After the bell, US STIR had priced a 63% chance of a 25bp hike in May.

  • Cash ACGBs are flat to 1bp cheaper with the 3/10 curve flatter and the AU-US 10-year yield differential +8bp at -17bp.
  • Swaps rates are flat to 1bp higher with the 3s10s curve 1bp flatter.
  • Bills strip pricing is -5 to -1 with the whites leading.
  • RBA dated OIS is flat to 3bp firmer across meetings with a 18% chance of a 25bp hike priced for tomorrow.
  • CoreLogic Capital City Aggregate house price data has printed +0.8% M/M, the first rise since April last year.
  • The local calendar is also scheduled to release today Dwelling Approvals (Feb), Housing Finance (Feb) and the Melbourne Institute Inflation Gauge (Mar).
  • The highlight of the week nonetheless will be the RBA Decision tomorrow with BBG consensus expecting a no-change outcome. In the March Meeting Minutes, the Board took the unusual step of agreeing to reconsider the case for a pause in April. The data on balance since, particularly retail sales data and the CPI monthly, have thrown weight behind a policy pause outcome this week.

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