Weaker After U.S. Tsy Yields Push Higher

ACGBs are cheaper (YM -13.0 & XM -11.0) in line with higher U.S. Tsy yields in NY trade as banking crisis concerns moderated on news that U.S. authorities were expanding emergency lending to banks. After the bell 2-year and 10-year U.S. Tsy yields were respectively 23bp and 15bp higher. U.S. STIR pricing firmed with a 50/50 chance of a 25bp hike in May and year-end easing reduced to 75bp from 95bp at Friday’s close.

• Cash ACGBs open 11-12 weaker with the 3/10 curve 1bp flatter and the AU-US 10-year yield differential at -24bp.
• Swaps shunt weaker with rates 9-10 higher and EFPs little changed.
• Bills strip pricing is -7 to -12 with late whites/early reds leading.
• RBA dated OIS pricing opens flat to 7bp firmer across meetings with expected year-end easing reduced to 30bp.
• The local calendar heats up today with the release of February Retail Sales. After a volatile couple of months, the market will be keen to see if household spending weakness seen in Q4 GDP data has carried over into early 2023. RBA tightening and higher cost of living both appear to be dampening consumer demand. BBG consensus +0.2% M/M.
• The AOFM is slated to sell A$150mn of 0.75% 21 November 2027 Index Linked bond.