Subdued Session Ahead Of FOMC Decision

ACGBs (YM flat & XM +2.0) sit slightly richer after dealing in relatively narrow ranges in today’s Sydney session. With the domestic calendar empty today, trading has been all about consolidating yesterday’s post-RBA rally ahead of the FOMC Decision later today.

• Cash ACGBs are flat to 2bps richer, with the AU-US 10-year yield differential 2bps higher at -23bps.
• Swap rates are 1-3bps lower.
• The bills strip is slightly mixed, with pricing +1 to -1.
• RBA-dated OIS pricing is little changed. Given that OIS pricing aligned with the unanimous consensus among Bloomberg analysts, expecting a status quo decision yesterday, minimal market reaction in front meetings was anticipated. Likewise, year-end easing expectations have only slightly softened to 38bps compared to 36bps before the decision.
• Where there has been a notable reaction has been in terminal rate expectations. Before yesterday's meeting, the anticipated terminal rate stood at the effective cash rate of 4.32%. However, following the RBA's decision to remove the explicit tightening bias, there has been a softening of 5bps to 4.27%.
• Tomorrow, the local calendar sees the February Employment Report along with Judo Bank PMIs (Mar P). Consensus expects a 40k increase in Jobs, with the Unemployment Rate falling from 4.1% to 4.0%.