Yields Higher, US Tsys Cheaper After Stronger Than Expected Data

ACGBs (YM -3.0 & XM -4.0) are cheaper after US tsys finished mostly cheaper, with the curve steeper. The key driver for the move was the US data dump, which showed lower-than-expected Initial Jobless Claims (187k vs 205k est), and higher-than-expected Building Permits (1.495M vs 1.476M est) and Housing Starts (1.460M vs 1.425M est, prior down-revised to 1.525M from 1.560M). MNI's Chicago Business Barometer was also revised higher to 47.2 in December from 46.9.

• The probability of a March rate cut by the Fed briefly dipped below 50%, before finishing at 52%.
• The NASDAQ climbed 1.4%, after an analyst upgrade for Apple and a strong outlook from Taiwan Semiconductor. The S&P 500 rose 0.9%.
• Oil pushed 1%+ higher on the prospect of a wider conflict in the Middle East as Iran and Pakistan jousted. The move was tempered in part by a forecast of ample supply from the Paris-based International Energy Association.
• Cash ACGBs are 2-4bps cheaper, with the AU-US 10-year yield differential 2bps tighter at +16bps.
• Swap rates are 1-3bps higher.
• The bills strip is little changed, with pricing flat to -1.
• RBA-dated OIS pricing is unchanged across meetings. A cumulative 36bps of easing is priced by year-end.
• Today, the local calendar is empty.