Subdued Trading Ahead Of US Payrolls, RBA Policy Decision On Tuesday

ACGBs (YM +2.0 & XM +2.5) remain richer. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Producer Prices and Home-Loan Values. Neither were market-moving. Ranges have been relatively narrow in the session as local participants await US Non-Farm Payrolls data later today.

• Cash US tsys have also been trading in narrow ranges in today’s Asia-Pac session. Currently, they are dealing 1-2bps cheaper across benchmarks.
• Cash ACGBs are 2-3bps richer, with the AU-US 10-year yield differential 3bps wider at +9bps.
• The May-34 ACGB auction went smoothly. The more dovish assessment of the RBA’s policy outlook, combined with a still elevated outright yield, a steeper curve, a low level of issuance, and the line’s inclusion in the XM basket all look to have contributed to today’s bidding.
• Swap rates are 2-4bps lower, with the 3s10s curve flatter.
• Bills are flat to +2, with the strip flatter.
• RBA-dated OIS pricing is 1-3bps softer for meetings beyond June, with a cumulative 63bps of easing priced by year-end.
• Next week, the local calendar sees Judo Bank PMI Services & Composite, MI Inflation Gauge, Trade Balance and ANZ-Indeed Job Advertisements on Monday. The week’s highlight is however the RBA Policy Decision on Tuesday.