Trading On A Weak Note, Wage Price Index On Wednesday

ACGBs (YM -6.0 & XM -7.5) are sitting at session lows. While the local session had RBA Governor Lowe’s appearance before Parliament, the market's direction appears more linked to the direction in US tsys, which are testing overnight lows in Asia-Pac trade.

• In his testimony, Governor Lowe highlighted household consumption and services inflation as the risks that will determine the policy path. These are familiar themes. Lowe added that the RBA is in watch-and-wait mode.
• Cash ACGBs are 5-7bp cheaper with the AU-US 10-year yield differential -2bp at +1bp.
• Swap rates are 4-6bp higher.
• The bills strip twist steepens with pricing flat to -6.
• RBA-dated OIS pricing is 1-3bp firmer across meetings.
• (AFR) Outgoing RBA governor Philip Lowe has urged policymakers not to succumb to the allure of quick fixes for the housing crisis, warning rent controls would make the shortage of homes even worse over the long term. (See link)
• Next week, the local calendar is uneventful on Monday. On Tuesday, attention turns to the CBA Household Spending data, setting the stage for the highly significant Wage Price Index scheduled for release on Wednesday and the Employment report on Thursday.
• The AOFM has announced plans to sell A$500mn of 2.75% 21 May 2041 bond on Wednesday.