AUSSIE BONDS: Slightly Richer Ahead Of CPI, Trump 100D Remarks Light On Details
Apr-30 00:18
ACGBs (YM +1.0 & XM +0.5) are slightly stronger after US tsys finished near midday bests Tuesday.
- US President Trump has spoken at a rally on his first 100 days in office. He stated that tax cuts will be passed in the coming weeks/months.
- On trade/tariffs, he noted he had given flexibility for the auto sector, but stated that automakers will be slaughtered if they don't onshore production.
- On trade deals, he stated that officials from India, France and China are coming to make deals, but didn't provide any more details than that.
- Cash ACGBs are flat to 2bps richer with the AU-US 10-year yield differential at +2bps.
- Swap rates are 1-2bps lower.
- The bills strip has twist-flattened, with pricing -2 to +2.
- RBA-dated OIS pricing shows a 50bp rate cut in May as a 10% probability, with a cumulative 116bps of easing priced by year-end.
- Today, the local calendar will see Q1 CPI. It is forecast to show the RBA's preferred trimmed mean falling below the top of the 2-3% target band for the first time since Q4 2021. This should signal another 25bp cut on May 20. Retail sales are on Friday. The Federal Election is on Saturday.
- The AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond on Friday.
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US TSYS: Cash Bonds Richer To Start The Week
Mar-31 00:17
TYM5 is 111-17+, +0-11 from closing levels in today's Asia-Pac session.
- According to MNI's technicals team, Jun'25 10Y futures have breached initial technical resistance at 110-26 (Mar 25 high). The medium-term trend condition is bullish, the first key resistance is located at 111-17+, the Mar 20 high.
- A strong risk-off tone has extended into today’s Asia-Pac session ahead of this week's Trump Tariff "Liberation Day" rollout on April 2, not to mention Friday's employment data for March.
- Cash US tsys are 5-6bps richer across benchmarks, with a slight steepening bias, as concern over the health of the US economy fuels demand for haven assets.
- "US Treasuries have outperformed stocks this quarter, heading for a more than 2% gain, while the equity benchmark S&P 500 fell about 5%. It marks the first time since the onset of the pandemic in March 2020 that stocks fell, and bonds rose in a three-month period." (per BBG)
AUSSIE BONDS: Solid Absorption of May-28 Supply With More Demand Present
Mar-31 00:11
The latest round of ACGB May-28 supply sees the weighted average yield print 1.15bps through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.
- Moreover, the cover ratio jumped to a robust 4.4250x from 3.5400x at the previous outing.
- As highlighted in the preview, the outright yield was 15-20bps higher than the previous but around 55bps lower than the cycle peak in early November last year.
- Additionally, market expectations for RBA easing in 2025 have become more aggressive ahead of tomorrow’s RBA Policy Decision. While a 25bp rate cut in April is given only a 5% probability, a cumulative 70bps of easing is priced by year-end.
- Also on the positive side, it's important to note that the May-28 bond was included in the YM basket and that sentiment towards global bonds has improved recently.
- There has been no notable movement in the cash line in post-supply dealings.
AUSSIE BONDS: ACGB May-28 Auction Results
Mar-31 00:03
The Australian Office of Financial Management (AOFM) sells A$600mn of the 2.25% 21 May 2028, issue #TB149:
- Average Yield (%): 3.6498 (prev. 3.5038)
- High Yield (%): 3.6525 (prev. 3.5050)
- Bid/Cover: 4.4250x (prev. 3.5400x)
- The amount allotted at the highest accepted yield as a percentage of the amount bid at that yield (%): 72.4 (prev. 96.4)
- Bidders 37 (prev. 32), successful 11 (prev. 12), allocated in full 7 (prev. 7)
