A Little Richer After Government Publishes Its MYEFO

In futures roll-impacted dealings, ACGBs (YM +2.2 & XM +4.4) are slightly stronger after the government publishes its Mid-Year Economic and Fiscal Outlook (MYEFO).

• As expected, the budget and debt ratio projections improved compared with May’s budget. A surplus is not yet forecast for this financial year. A small deficit of $1.1bn is projected (a $12.8bn improvement) but it is a negligible share of the economy.
• Today’s announcement was not a mini-budget but an update on the position of Australia’s government finances. The MYEFO shouldn’t change the RBA’s view that fiscal policy is currently not inflationary.
• (AFR) Businesses and workers who do not pay their taxes on time will no longer be able to deduct the late fee, in a new measure that Treasurer Jim Chalmers expects to raise $500 million per year. (See link)
• This afternoon sees CBA’s household spending insights print.
• US tsys are dealing 1-2bps richer in the Asia-Pac session ahead of tonight’s FOMC rate decision.
• Cash ACGBs are 3-4bps richer, with the AU-US 10-year yield differential 4bps tighter at +9bps.
• Swap rates are 2-3bps lower, with EFPs slightly wider.
• The bills strip is flat to +2 across contracts.
• RBA-dated OIS pricing is slightly softer across meetings.