Stronger Ahead Of The RBA Decision Tomorrow

ACGBs are firmer (YM +3.0 & XM +7.5) on the stronger lead from U.S. Tsys ahead of the weekend. China's annual economic growth target being at the attainable end of the perceived range of outcomes is probably adding some light support as well. Cash ACGBs bull flatten with yields 4-9bp lower. The AU/US 10-year yield differential is however 4bp wider at -12bp.

• Swaps are 4-8bp stronger with the 3s10s curve 4bp flatter.
• Bills are 1-5bp richer, led by the reds.
• Ahead of the RBA decision on Tuesday, RBA-dated OIS is pricing a 92% chance of a 25bp hike. More broadly, strip pricing is mixed, albeit little changed, with meetings out to May flat to +2bp, but beyond May are 1-2bp lower.
• With only the MI Inflation Gauge (Feb) slated today, the domestic focus will remain on setup into the the RBA decision and RBA Governor Lowe’s AFR Summit speech on Wednesday. The market will be keen for an update after the RBA signaled multiple hikes by removing the ‘not on a pre-set course’ in the February statement. With Q4 WPI and January monthly CPI both surprising on the downside since then, the market will be watching to see if the RBA stays on the pre-set course of “further increases in interest rates will be needed” (liaison scheme comments re: wages will likely be key here).
• Also note that the AOFM is slated to sell A$500mn of the 0.50% 21 Sep 2026 bond today.
• Further afield, Fed Chair Powell's semi-annual testimony to Congress, the NFP print and the latest BoJ & BoC decisions will draw attention through the week.