At Sydney Session Cheaps, CPI Monthly Data Due Tomorrow

ACGBs (YM -4.0 & XM -3.5) are weaker and near session cheaps on another data-light Sydney session.

• The highlight of the local calendar this week comes tomorrow in the form of July CPI Monthly data. July CPI data is expected to ease to 3.4% y/y from 3.8% but won’t include an update of most services components. This outcome requires the CPI to fall on the month. The moderation is expected to be driven by lower food inflation and an outright fall in petrol prices, as well as government cost-of-living measures.
• Q2 Construction Work Done is also due for release tomorrow.
• Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session after being slightly richer earlier.
• Cash ACGBs are 5-6bps cheaper, with the AU-US 10-year yield differential at +9bps.
• Swap rates are 3-4bps higher, with EFPs tighter.
• The bills strip is slightly cheaper, with pricing -2 to -4.
• RBA-dated OIS pricing is flat to 4bps firmer across meetings, with Aug-25 leading. A cumulative 25bps of easing is priced by year-end.
• Tomorrow, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond. There is a planned sale of A$700mn of the 2.75% 21 November 2029 bond on Friday.