AUSSIE BONDS: Cheaper & Near Worst Levels But A Subdued Session

ACGBs (YM -3.0 & XM -3.0) are weaker, hovering near Sydney session lows. Despite the decline, today's trading ranges have remained relatively narrow, reflecting subdued market activity. 

• Today's extension of the recent selloff for ACGBs, which brings the rise to 60-70bps over the past month, potentially leaves Aussie bonds vulnerable to a short squeeze into next week’s quarterly CPI data.
• With the domestic calendar light today, local participants have likely eyed US tsys for guidance. Cash US tsys are ~2bps cheaper in today’s Asia-Pac session after yesterday’s modest extension of Monday’s heavy session. Today's US calendar will see MBA Mortgage Applications, followed by existing home sales & the Federal Reserve Beige Book.
• According to the latest results of a Bloomberg News survey, the Australian economy will expand by 1.2% in 2024, 2.1% in 2025 and 2.5% in 2026. (See link)
• Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at +23bps.
• Swap rates are 1bp higher, with EFPs tighter.
• The bills strip is slightly weaker, with pricing -1 to -3.
• RBA-dated OIS pricing is little changed. A cumulative 3bps of easing is priced by year-end.
• Tomorrow, the local calendar will see Judo Bank PMIs and the RBA Annual Report.