Weaker, Supported By JGBs, Eyes US PCE Deflator

ACGBs sit weaker (YM -4.0 & XM -3.0) but well off session cheaps after JGBs rallied on the BoJ policy decision. US Tsys richened around 2bp after the BoJ decision versus +4-5bp for ACGBs. Before the post-BoJ spike the local market had appeared troubled by a firm Q1 PPI print. Private sector credit printed in line with expectations.

• Cash ACGBs are 2-3bp cheaper with the AU-US 10-year yield differential -3bp at -12bp.
• Swap rates are 1-2bp higher with EFPs 2bp tighter.
• Bills strip pricing is -3 to -7 with late whites the weakest.
• RBA dated OIS pricing is 1-7bp firmer with late ‘23/early ’24 leading.
• Q1 PPI data printed an increase of 1.0% Q/Q and +5.2% Y/Y versus 0.7% and +5.8% in Q4. According to the ABS, electricity and gas supply (+13.3% Q/Q) was the key upside driver, with fuel refining and manufacturing (-7.2% Q/Q) and furniture and other manufacturing (-5.8% Q/Q), as the weakest components.
• The local calendar highlight next week is the RBA policy decision on Tuesday.
• Until then, all eyes will be on the release late today of the March PCE Deflator.
• The AOFM announced today that it plans to sell A$800mn of the 4.50% 21 April 2033 on Wednesday May 3.