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Twist Flatten As U.S. Tsy Weaken in Asia-Pac


ACGBs are little changed (YM flat & XM +1.0) despite cash U.S. Tsys weakening in early Asia-Pac trade. U.S Tsy bear flatten with yields 5-7bp cheaper.

  • On the local data front, the Melbourne Institute Inflation Gauge eased to 5.7% in March from 6.3%, indicating that it likely peaked at 6.4% in January. Building Approvals showed a weaker-than-expected increase of 4.0% M/M (+10.0% expected) in February, while Home Loan data for February surprised on the upside with a fall of 0.9% M/M versus expectations of -1.8%.
  • At the time of writing, the local data drop had failed to provide a domestic driver for a market that is well and truly shifted its focus to tomorrow’s RBA rates decision.
  • Cash ACGBs are flat to 1bp richer with the curve slightly flatter and the AU-US 10-year yield differential +2bp at -23bp.
  • Swaps are 1-2bp richer with the 3/10 curve 1bp flatter and EFP slightly tighter.
  • Bills strip flattens with pricing -3 to +1.
  • RBA dated OIS is flat to 3bp firmer for meetings beyond April with a 15% chance of a 25bp hike priced for tomorrow.

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