Weaker, Off Worst Levels, US Earnings Watch

ACGBs sit weaker (YM -5.0 & XM -5.0) but off worst levels as US Tsys firm slightly in Asia-Pac trade. Cash ACGB benchmark yields are 4-5bp higher with the AU-US 10-year yield differential -3bp at -14bp.

• Swaps are 5-6bp cheaper with the 3s10s curve 1bp flatter.
• Bills strip is steeper with pricing -2 to -11.
• RBA dated OIS is 3-5bp firmer for meetings beyond June with Feb-24 leading. May meeting has a 24% chance of a 25bp hike.
• The local calendar is light this week with tomorrow’s release of the RBA Minutes for April as the highlight. After the RBA left the cash rate unchanged at 3.6% (the first pause in this tightening cycle) the market will be searching for clues on the near-term path of policy.
• The market will continue to eye US earnings season after US Tsys were guided cheaper in trade ahead of the weekend in part due to higher-than-expected large bank earnings. The US economic calendar is relatively this week.
• Participants will continue to be on alert for the launch of the new ACGB Dec-34 after the AOFM revealed on Friday that it aims to issue the line via syndication at some point this week.