Treading Water Ahead of Data Drop

ACGBs firm in early Sydney trade (YM +4.0 & XM +2.0) after U.S. Tsys largely hold gains from weaker Durables New Orders despite some weakening after Fed Governor Jefferson joined the recent chorus of hawkish Fed speakers. Cash ACGBs are 2-4bp lower in yield with the 3/10 curve 2bp steeper.

• The AU/US cash yield differential is unchanged at -5bp.
• Swaps are also firmer with rates 1-3bp lower and the 3s10s curve 2bp steeper.
• Bills are flat to 2bp firmer through the reds, comfortably above overnight cheaps.
• RBA dated OIS hold yesterday’s +7-12bp firming for meetings beyond June, with terminal rate pricing back within striking distance of its cycle high (4.42%) at 4.34%.
• A heavy day of economic releases locally with January monthly prints for Retail Sales, Private Sector Credit and CoreLogic House Prices, and Q4 Current Account data. National Accounts Q4 GDP is slated for tomorrow with consensus currently expecting +0.7% Q/Q.
• With GDP data somewhat dated, the market will more likely be attuned to the monthly data prints, with the strength of the bounce back in retail sales after December’s 3.9% decline a focus. House price data will also be noteworthy given that the annual pace of decline (-8.7%) in January eclipsed the 2018-19 correction.
• Elsewhere, the AOFM is to sell A$100mn of 0.75% 21 Nov 2027 Index-Linked Bond.