ACGBS Richer Post US Data, Employment Data Up Shortly

ACGBs (YM +8.0 & XM +8.5) are richer today following on from moves made overnight in US treasury futures after Retail Sales missed estimates (prior month revised lower), supercore CPI was still hot but broadly as expected 0.42% M/M (and with its large 0.19pp contribution from vehicle insurance that isn’t reflected in PCE). Locally, employment data is expected shortly, market expects the unemployment rate to tick up to 3.9% from 3.8%.

• Cross-asset moves: Risk assets rallied over night with, equities making new all-time-highs overnight, this caused weakness in the USD with the BBDXY down 0.64% making it the largest drop this year, while high beta FX including AUD & NZD rallied while Aussie credit is little changed in spread terms this morning.
• Overnight, CPI was 3.4% y/y vs 3.4% est, 0.3% m/m vs 0.4% est, Retail Sales were 0.0% m/m vs 0.4% est.
• US Tsys curve was little changed with the 2y10y -0.845 at -38.581, yields were 8-11bbps lower
• The ACGB is slightly flatter today with better buying taking place at the 10y tenor. Yields are 7-8bps lower, the 2y10y -1.580at 27.520, while the AU-US 10-year yield differential is 4little changed at -11.5bps
• Swap rates are 1-3bps lower
• The bills strip is flat to 6bps higher, curve steeper.
• RBA-dated OIS implied rate is 4-6bps lower this morning out past the September meetings and is now pricing 12.5bps of easing into the year-end to a terminal rate of 4.225%
• Today, we have employment data at 11.30am