Weaker, Subdued Session For U.S Tsys

ACGBs are softer (YM -4.0 & XM -5.5) with U.S Tsys little changed after a NY session of little news and improving risk sentiment. The US KBW banking index was up 1.7%. There was little reaction to Fed Chair Powell’s lunch with the Republican Study Committee where he cited Fed forecasts of one more hike this year. Cash ACGBs open 4-5bp cheaper with the AU-US 10-year yield differential +3bp.

• Swaps open 4-5bp weaker with the 3s10s curve 1bp steeper.
• Bills are -6 to flat with whites leading.
• Locally, Job Vacancies (Feb) is slated for release today after -4.9% Q/Q previously.
• The market’s focus however is likely to have already shifted to next Tuesday’s RBA decision given this week’s release of retail sales and CPI monthly data, two releases explicitly cited by RBA Governor Lowe as key inputs to the decision in April.
• Based on market pricing, this week’s CPI and retail sales data should be enough to offset resilient business conditions and robust jobs data, delivering a pause from the RBA next week.
• RBA dated OIS opens with April meeting pricing attaching a 15% chance of a 25bp hike. More broadly, the market opens with pricing flat to 6bp firmer across meetings.