AUSSIE BONDS: Holding Twist-Steepener, Narrow Ranges

*JAPAN 20Y GOVT BOND AUCTION MAY HAVE 96.10 LOWEST PRICE:POLL– BLOOMBERG

ACGBs (YM -6.0 & XM -7.5) are weaker and near cheaps on a data-light session.

• “Australia has failed to secure an exemption from US steel and aluminum tariffs despite Prime Minister Anthony Albanese's government's lobbying efforts. Albanese called the tariffs "entirely unjustified" and "economic self-harm" on the part of the US, but said Australia would not take reciprocal measures and would instead work to diversify exports.” (per BBG)
• Cash US bonds are slightly richer in today’s Asia-Pac session after yesterday’s heavy NY session. The February CPI report is the scheduled highlight of today’s US session, while some attention will be paid later in the morning to the Bank of Canada which is expected to deliver a 25bp cut.
• Cash ACGBs are 5-7bps cheaper with the AU-US 10-year yield differential at +18bps.
• Swap rates are 4-7bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing -1 to -3.
• RBA-dated OIS pricing is flat to 3bps firmer across meetings today. A 25bp rate cut in April is given a 9% probability, with a cumulative 65bps of easing priced by year-end (based on an effective cash rate of 4.09%). 

USD/CNH has tracked USD/CNY lower since onshore FX markets re-opened. Both CNH and CNY are up only around 0.10% against the USD, but continue to solidify recent stronger trends versus the USD. Both pairs were back near 7.2230 in recent dealings. 

• The only modest downtick in the USD/CNY fixing didn't deter onshore spot markets. The pair quickly gapped lower to 7.2161 in early dealings. We have since stabilized somewhat, but upticks are being faded.
• Current levels were last seen in Nov last year, while the simple 200-day MA comes in close to 7.2175, so a sustained break of that may see round figure support at 7.2000 targeted.
• For USD/CNH, it is a similar backdrop (the simple 200-day MA close to 7.2220).
• The yuan is outperforming a softer local equity backdrop so far today, but losses are very modest. The USD BBDXY index is a touch higher, but aggregate G10 losses against the USD are also very modest at this stage. 

Fig 1: USD/CNY Spot Close To Simple 200-day MA 

Source: MNI - Market News/Bloomberg