Weaker, Sitting Just Off Cheaps

ACGBs are weaker (YM -6.0 & XM -5.5) sitting just off Sydney session lows with a relatively light local calendar. Without domestic drivers, local participants were likely on headlines and US tsys watch. US tsys have twist flattened in Asia-Pac trade with yields +1bp to -1bp.

• Cash ACGBs are 5bp cheaper with the AU-US 10-year yield differential +1bp at -7bp.
• Swap rates are also 5-6bp higher with EFPs little changed.
• The bills strip is steeper with pricing -1 to -7.
• RBA dated OIS are 1-4bp firmer across meetings beyond June. The market attaches a 16% chance of a 25bp hike at the June meeting.
• A Bloomberg article reports an A$8.6 billion debt levy on businesses with payrolls above A$10 million a year and property investors form the centrepiece of Victoria’s budget to “pay off our COVID credit card”, Treasurer Tim Pallas revealed on Tuesday – AFR. (link)
• The local calendar is light tomorrow with the Westpac-MI Leading Index as the only release.
• RBA Jacobs, Head of Domestic Markets, speaking at a Fixed Income Forum in Tokyo (0810 BST / 1710 AEST).
• The AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond tomorrow.