ACGBS Slightly Richer, Little Reaction To Fed Budget, US CPI Later

ACGBs (YM -1.0 & XM -1.0) are slightly richer, US treasury futures gapped lower as US PPI was released however quickly reversed those moves as the market digested the finer details of the print. Post the Australian closed on Tuesday the Federal Budget was handed down, so far there has been little in the way of market reaction, while focus for markets today will turn to US CPI.

• Cross-asset moves: Equities were higher overnight led by tech stocks with the Nasdaq finishing up 0.75%, the USD was weaker with the BBDXY down 0.13% and the AUD trading up 0.27% while Iron Ore was down 0.30% at $115.70/ton.
• Overnight, Core PPI Metrics Surprise Higher, Flat To Notably Negative Revisions: The main PPI metrics surprise higher, with no sign of the further moderation in supply chain pressures per the NY Fed’s GSCPI. PPI final demand: 0.52% M/M (cons 0.3) after a downward revised -0.10% (initial +0.15).
• US Tsys curve was little changed with the 2y10y -0.158 at -37.736, yields were 4.5.5bps lower
• The ACGB curve is little changed this morning with the 2y10y -0.140 at 30.310, yields are about 0.5bps higher, while the AU-US 10-year yield differential is 4.5bps higher, now -10.5bps
• Swap rates are 1-2bps lower
• The bills strip is 1bp lower
• MNI INTERVIEW: Chance RBA Hikes Again - Ex Senior Official - (See link)
• RBA-dated OIS implied rate now pricing 1bps lower into the November meeting, market has softened a touch and is now pricing 5bps of easing into year-end to a terminal rate of 4.30%
• Today, we have the $800 2035 Bonds Auction at 11.00am, and Wage Price Index at 11.30am AEST