Weaker On U.S Tsy Lead

ACGB are weaker (YM -5.0 & XM -4.0) after ISM prices paid data delivers a weaker close for U.S. Tsys in a volatile NY session. Fedspeak was generally hawkish although Minneapolis Fed President Kashkari did state that “overtightening policy definitely a risk”. Cash ACGBs open 5bp weaker across the curve but outperform U.S. Tsys with the 10-year yield differential tightening 2bp to -16bp. 3/10 cash curve is unchanged.

• Swaps open 6-7bp weaker, with EFPs 1bp wider and the 3s10s curve 1bp flatter.
• The Bills strip is 5-6bp cheaper, unwinding a large part of yesterday’s post-data rally.
• RBA-dated OIS pricing holds yesterday’s 7-15bp softening for meetings beyond May, with Terminal rate pricing at ~4.22%. March meeting pricing remains around a 95% chance of a 25bp hike.
• After yesterday’s data-induced rally, the market has time to digest the news with the local docket relatively light today. January Building Approvals is the only release. BBG consensus is for -7% M/M after December’s 18.5% rise. It is one of the most volatile series produced by the ABS.