AUSSIE BONDS: Cheaper Start To Week, Uncertainty Over Tariffs on Electronics
Apr-13 23:56
ACGBs (YM -8.0 & XM -4.5) are weaker following a heavy end to last week for US tsys. On Friday, US tsys finished cheaper, with curves flatter.
- The big news over the weekend was President Trump's exemptions on smartphones, computers, and other electronics, though this has been downplayed over the weekend as a procedural step. They will be looking at the whole electronic supply chain.
- US 10-year futures (TYM5) are dealing at 109-26, +0-03 from closing levels in today's Asia-Pac session.
- On Friday, US tsy futures moved off lows after lower-than-expected PPI (prior up-revised slightly). UofM sentiment was lower than expected but anticipated inflation expectations were higher.
- Cash ACGBs are 5-8bps cheaper with the AU-US 10-year yield differential at -5bps.
- Swap rates are 3-9bps higher, with the 3s10s curve steeper.
- The bills strip has bear-steepened, with pricing -3 to -9.
- RBA-dated OIS pricing is 2-13bps firmer across meetings today. A 50bp rate cut in May is given a 39% probability, with a cumulative 116bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- Today, the local calendar will be empty, ahead of the release of the RBA Minutes for the April Meeting tomorrow.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
