Yields Higher, US Tsys Weaker After Non-Farm Payrolls

ACGBs are weaker (YM -12.0 & XM -8.0) after US tsy yields rose in trading ahead of the weekend following solid payrolls growth and an expected decline in the unemployment rate. US equities made strong gains led by US regional banks. The KBW banking index rose by over 4.5%. After the NY bell on Friday, 2-year and 10-year US tsys were 12bp and 6bp cheaper.

• Cash ACGBs opened 8-12bp cheaper with the AU-US 10-year yield differential +3bp at -3bp.
• Swap rates opened 8-11bp higher with the 3s10s curve 2bp flatter.
• The bills strip is steeper with pricing -4 to -15.
• RBA dated OIS opened 5-12bp firmer for meetings beyond September with early'24 leading.
• NAB Business Confidence (Apr) and Building Approvals (Mar) are slated for release today.
• The Federal Budget is scheduled for release tomorrow with BBG consensus expecting a A$5.35bn deficit, 0.25% of GDP for FY23. The Treasurer is also likely to announce new policy initiatives aimed at balancing fiscal restraint with relief for the most vulnerable. Initiatives may include tax changes, program reforms, and relief for households. The budget starting position is expected to have improved due to advantageous developments in commodity prices, inflation, and the labour market.