Soft U.S. Data Leads To Bull Steepening & Easing Of RBA Hike Pricing

ACGBs have played catch up to Friday’s U.S. data impulse (headlined by soft wage readings and a weak ISM services survey), leaving the major cash benchmarks running 8-17bp richer this morning as the curve bull steepens, with 3s outperforming.

• YM is +17.0, while XM is +13.0. Both have looked through their overnight highs, but those moves have lacked momentum, resulting in the contracts consolidating their overnight gains.
• Bills run 3-17bp richer through the reds, with a flattening bias apparent.
• RBA dated OIS comes in as Sydney reacts to the U.S. data and subsequent downtick in market pricing re: Fed tightening, with 18bp of tightening priced for the RBA’s Feb ’23 meeting, 2bp or so softer on the session, while terminal cash rate pricing is just over 10bp softer on the day, showing just below 3.90%.
• Building approvals data headlines the domestic docket on Monday, although shouldn’t be of much net importance for AUD rates intraday. That will leave focus on headline flow and wider market themes.