Subdued Data-Light Session To End The Year

ACGBs (YM -4.0 & XM -7.0) are holding cheaper on the final trading session of 2023 after dealing in relatively narrow ranges. With the local calendar empty, local participants are likely eyeing US tsys in today’s Asia-Pac session after a poor 7-year auction initiated some profit-taking in yesterday’s NY session.

• US tsys are currently dealing flat to 1 bp richer across benchmarks versus NY closing levels.
• Cash ACGBs are 4-7 bps cheaper, with the 3/10 curve steeper and the AU-US 10-year yield differential 2 bps wider at +12 bps.
• Swap rates are 3-5 bps higher, with EFPs little changed.
• The bill strip is cheaper, with pricing from -1 to -4. Mid-reds are the weakest.
• RBA-dated OIS pricing is dealing mixed, but the moves remain small across meetings.
• (AFR) For the Australian economy, 2024 is shaping up to be a year of two halves. If 2022 was defined by a post-pandemic spending binge, and 2023 by the hangover of high inflation and rising interest rates, 2024 will be defined by how long it takes for life to return to some kind of normality. (See link)