AUSSIE BONDS: ACGBs Richer, Curve Steepens Tracking Move In US Tsys

ACGBs (YM +6.6 & XM +3.3) are richer today, tracking moves made in US tsys. 

• Australian household spending rose by 1.8% in August, driven by early Father's Day celebrations, according to a survey by the Commonwealth Bank. Spending in hospitality and household goods saw the biggest gains, increasing by 5.2% and 4.4%, respectively. Utilities and transport spending both fell by 0.3%, partly due to government rebates and lower petrol prices. Despite the rise, the annual spending rate still reflects relatively weak consumer activity.
• US Tsys have rallied, with short-end yields falling as investors speculated about a potential 50bps interest rate cut by the Fed next week. The yield on two-year notes dropped 5.5bps to 3.584%, while the 10-year yield fell 2.8bps to 3.646%. There was a decent sized Block trade in Fed Futures post the NY close which saw the market shift from a 20% to a 45% chance of a 50bps cut next week. While comments from ex-NY Fed Pres Dudley who suggested a 50bps cut could be warranted.
• Cash ACGBs are 1-6bps richer, the 2yr yield is -5bps at 3.558%, while the 10yr is -2.7bps at 3.822%. The AU-US 10-year yield differential is little changed today at 17bps.
• Swap rates are 3-6bps lower, with the curve flatter.
• The bills strip is little changed today
• RBA-dated OIS pricing has 5bps into year-end with 22bps of cuts priced now. Pricing has also firmed 2-10bps for meetings through to August 2025.
• Today, the local calendar was empty, with focus now turning to Retail Sales on Thursday, followed by FOMC later in the day.