Steady After RBA FSR & Trade Data

ACGBs are holding richer (YM +5.0 & XM +6.5) on the day in a narrow range with US Tsys little changed in Asia-Pac trade. February’s much larger-than-expected trade surplus of A$13.87bn (versus A$11.22bn expected) and the RBA Financial Stability Review (FSR) failed to provide a local catalyst.

• The FSR reiterated a familiar refrain that Australian lenders were “unquestionably strong”, adding that households and firms were well placed to cope with higher interest rates and inflation. Banks did however expect a rise in non-performing loans, albeit from low levels. RBA also noted that about 40% of home loans have less than 3-month buffer.
• Cash ACGBs are 5-7bp richer on the day with the 3/10 cash curve 2bp flatter.
• Swap rates are 3-5bp lower with EFPs 2bp wider.
• Bills pricing is flat to +4 with the strip flatter.
• RBA dated OIS pricing is 1-4bp softer across meetings with 5bp of tightening priced for May.