Stronger, US Tsys Richen After FOMC Decision

ACGBs are stronger (YM +15.0 & XM +10.5) following a similar trend in US tsys the FOMC's decision to raise rates by 25bp, as anticipated. However, the FOMC's forward guidance signalled a possible pause at the June 14 meeting, with the explicit tightening bias replaced with a more tentative statement indicating that "additional policy firming may be appropriate," taking several factors into consideration.

• Fed Chair Powell has also emphasized the importance of data-driven decision-making and has indicated that the Fed will make decisions on a meeting-by-meeting basis. Two more employment and CPI reports are due ahead of the next meeting.
• Ahead of the FOMC, ADP private payrolls rose by 296k in April, close to double expectations.
• A reminder that cash tsys are closed until the London session due to the observance of a national holiday in Japan.
• Cash ACGBs are 11-15bp richer with the AU-US 10-year yield differential -1bp at -4bp.
• Swap rates are 10-15bp lower with the 3s10s curve 5bp steeper.
• The bills strip bull flattens with pricing +3 to +19.
• RBA dated OIS opened 5-16bp softer across meetings with early '24 leading. A 7% chance of a 25bp rate hike at the RBA's June meeting is priced.
• The March trade balance is scheduled for release.