Weaker But Outperform U.S. Tsys

ACGBs close weaker (YM -7.0 & XM -5.0) as Q4 Business Indicators fail to offset PCE-induced weakness in U.S. Tsys. Cash ACGBs do however outperform across the curve with yields 7-8bp higher versus the 8-12bp move in U.S. Tsys yields seen in pre-weekend NY trading. The AU/US 10-year differential closes 2bp tighter at -5bp.

• Bills finished 1 to 9bp cheaper through the reds..
• RBA dated OIS firm +7-12bp for meetings beyond June, with terminal rate pricing back within striking distance of its cycle high (4.42%) at 4.36%.
• With quarterly Business Indicators often difficult to interpret given their construction, the market appears destined to track U.S. Tsys, at least until tomorrow’s data drop of monthly Retail Sales and Private Sector Credit data, and the remaining quarterly partials (Q4 GDP on Wednesday). Abroad, PMI data globally is released on Wednesday, with European CPI and unemployment data on Thursday.
• Elsewhere, Treasurer Chalmers, in India for the G20 meetings, spoke on Sky News of the “opportunity to refresh the Reserve Bank Board” in response to news that two members would not seek re-appointment. On Sunday, the Treasurer said that a decision on the Governorship of the RBA will be made around mid-year.