SVB Collapse The Focus

In futures roll-impacted trading ACGBs are richer (YM +23.2 & XM +17.4) following the strong 20-28bp rally in U.S Tsys in NY trade ahead of the weekend. U.S. Tsys looked through the stronger-than-expected increase in payrolls (+311k) focusing on the two-tenths jump in the unemployment rate and the softer AHE print. Nonetheless, risk-off sentiment centred on the fallout from the SVB collapse appeared to be the market’s primary focus despite FDIC assurances that contagion in the financial system was unlikely. Over the weekend, U.S. authorities were preparing “material action” to shore up deposits in SVB and to try and stem any broader financial fallout.

• Cash ACGBs open 20-25bp stronger with the 3/10 curve 4bp steeper.
• Swaps open 14-18bp richer with EFPs 5-7bp wider.
• Bills strip is 7-17bp richer led by the reds.
• Ahead of the release of key local data this week RBA dated OIS are 4-19bp softer across meetings led by December with terminal rate expectations at 3.81%.
• With the local calendar light today, the market’s focus will remain on the SVB situation and the U.S. authorities’ responses.
• Later in the week, the local calendar is scheduled to release the all-important and often volatile Employment Report (Feb) on Thursday.