Subdued Dealing Ahead Of US Payrolls, Strong May-28 Auction, QTC Taps Jul-36 Bond

ACGBs (YM flat & XM flat) are dealing flat but ranges have been narrow in a typical pre-US Payrolls Friday. The local calendar has been empty so far, with Foreign Reserves data due later.

• Cash US tsys are dealing flat to 1bp cheaper, with a steepening bias, ahead of tonight’s Non-Farm Payrolls release. (See MNIs Payroll Preview here)
• Cash ACGBs are flat to 1bp cheaper, with the AU-US 10-year yield differential at +6bps.
• Swap rates are flat to 1bp higher, with the 3s10s curve flatter.
• Bill strip pricing is flat to -1.
• RBA-dated OIS pricing is slightly firmer for late 2024/early 2025 meetings. Terminal rate expectations sit at 4.49%.
• Earlier, the latest round of ACGB May-28 supply extended the recent trend of firm pricing at ACGB auctions, with the cover ratio rising to 4.0778x compared to 3.875x prior. Notably, today’s auction cleared with extremely few successful bidders, indicating aggressive bids from those investors.
• QTC priced an A$1.5bn increase of QTC 5.25% 21 Jul-36 A$ Fixed Rate Benchmark Bond, taking the total outstanding to A$5.65bn, according to Westpac (per BBG). The transaction has a re-offer yield of 5.415%, a clean re-offer price of 98.553% with 2.452% accrued interest and a re-offer spread of 100bps over the 10-year futures contract, equating to 90.5ps over the ACGB 3.75% 21 April 2037.