At Session Highs, Tracking Tsys In Asia-Pac But Outperforming

ACGBs (YM +8.0 & XM +8.0) are at Sydney session highs after US tsy futures strengthened during Asia-Pac dealing. TYZ3 moved higher alongside pressure on the USD/JPY as Finance Minister Suzuki reiterated that Japan won't rule out any options to address excessive FX moves. However, that gain in US tsy futures was subsequently pared, with cash US tsys currently sitting 2-3bp richer across the major benchmarks.

• Cash ACGBs are 7-8bp richer, with the AU-US 10-year yield differential 2bp lower at -14bp.
• Swap rates are 6-8bp lower.
• The bills strip has seen a bull flattening, with pricing +1 to +6.
• RBA-dated OIS pricing is flat to 1bp softer across meetings.
• Get ready for a world of more volatile inflation, gyrating interest rates and greater economic uncertainty. That was the warning from departing RBA Governor Lowe. Lowe said, “The increased prevalence of supply shocks, deglobalisation, climate change, the energy transition and shifts in demographics means either steeper supply curves or more variable supply curves.” (See link)
• Next week the local calendar is empty on Monday, ahead of Westpac Consumer Confidence and NAB Business Confidence on Tuesday, CBA Household Spending on Wednesday and the August Employment Report on Thursday.
• Next week the AOFM plans to sell A$150mn of 1.25% 21 August 2040 index-linked bond.