Yields Drift Higher With U.S. Tsys

YM -4.0 and XM -6.5 mid-session. RBA Governor Lowe’s message was generally hawkish, with the only meaningful fresh point coming at the end, as he noted that it is plausible that rates cuts come into play in '24, although conceded that a lot would have to go right for that to happen (markets have looked through this).

• The market has decided track weaker Asian trading for U.S. Tsys. Cash ACGBs were also 1-2bp weaker from morning levels to be 4-8bp higher in yield across the curve, led by the 15-30-year zone.
• The drift higher in yields came despite the successful takedown of ACGB Apr-26 supply which had a weighted average yield printing 2bp through prevailing mids and a cover ratio over 4.00x.
• The AU-US 10-year yield differential holds its recent narrowing to sit at ~-4bp.
• Swaps rates are 4-7bp higher, generally tracking bonds, with the 3s10s curve 3bp steeper.
• Bills are 1-4bp lower across the strip with the reds weakest.
• Subdued trading in RBA-dated OIS leaves pricing at morning levels with an 88% chance of a 25bp hike priced for the March meeting and terminal rate expectations (Sep/Oct-22) around 4.15%.