Stronger, Tight Range, Underperforms US Tsys

ACGBs sit richer (YM +3.0 & XM +2.5) after trading in a relatively narrow range for the Sydney session. The bid tone was assisted by a slight richening in global bonds in Asia-Pac trade. US Tsy yields sit 1-2bp lower in Asia-Pac trade.

• Cash ACGBs are 2-3bp richer with the 3/10 curve unchanged and the AU-US 10-year yield differential +2bp at -6bp.
• Swap rates are 5bp lower with EFPs little changed.
• Bills strip is marginally flatter with pricing +2 to +5.
• RBA-dated OIS pricing is flat to 4bp softer across meetings with 19bp of cumulative tightening priced by August.
• Next week sees the release of the much-awaited Q1 CPI data. With the almost a full 25bp rate hike priced by August, market pricing may need to be reassessed if the quarterly lends further support to the notion that inflation has peaked, as flagged by the CPI monthly release. BBG consensus expects Trimmed Mean CPI to be +1.4% Q/Q and +6.7% Y/Y versus +1.7% and +6.9% in Q4.
• Until then, participants will eye US Tsys’ response to the US earnings season, Fedspeak and global Flash PMIs.
• Elsewhere, Treasurer Chalmers commented in a statement that Australia is set to introduce a Sovereign Green Bond Program in Mid-2024.