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AUSSIE BONDS: Richer But Subdued Dealings, Q3 CPI Next Wednesday

AUSSIE BONDS
RegionGlobalBulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM +2.0 & XM +3.0) are stronger but off Sydney session highs.

  • With the domestic calendar light today, the local market likely eyed cash US tsys, which are ~2bps richer in today’s Asia-Pac session.
  • Cash ACGBs are 2-3bps richer with the AU-US 10-year yield differential at +23bps.
  • The 3/10 curve remains just below the upper range it has traded in since late 2022. The ACGB cash curve has closely tracked the recent upward pressure on the US 10-year yield. However, the local economic outlook may soon play a larger role, with the release of Q3 CPI data next Wednesday.
  • Inflation is expected to move back to the top of the RBA’s 2%-3% target band for the first time since Q1-21. Consensus estimates inflation slowed to 3.0% y/y from 3.8% in Q2.
  • Swap rates are 2-4bps lower, with the 3s10s curve flatter.
  • The bills strip has bull-flattened, with pricing flat to +4.
  • RBA-dated OIS pricing is 1-4bps softer for 2025 meetings. A cumulative 4bps of easing is priced by year-end.
  • Next week, the AOFM plans to sell A$700mn of the 2.75% 21 November 2028bond on Monday and A$800mn of the 3.50% 21 December 2034bond on Friday.
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ACGBs (YM +2.0 & XM +3.0) are stronger but off Sydney session highs.

  • With the domestic calendar light today, the local market likely eyed cash US tsys, which are ~2bps richer in today’s Asia-Pac session.
  • Cash ACGBs are 2-3bps richer with the AU-US 10-year yield differential at +23bps.
  • The 3/10 curve remains just below the upper range it has traded in since late 2022. The ACGB cash curve has closely tracked the recent upward pressure on the US 10-year yield. However, the local economic outlook may soon play a larger role, with the release of Q3 CPI data next Wednesday.
  • Inflation is expected to move back to the top of the RBA’s 2%-3% target band for the first time since Q1-21. Consensus estimates inflation slowed to 3.0% y/y from 3.8% in Q2.
  • Swap rates are 2-4bps lower, with the 3s10s curve flatter.
  • The bills strip has bull-flattened, with pricing flat to +4.
  • RBA-dated OIS pricing is 1-4bps softer for 2025 meetings. A cumulative 4bps of easing is priced by year-end.
  • Next week, the AOFM plans to sell A$700mn of the 2.75% 21 November 2028bond on Monday and A$800mn of the 3.50% 21 December 2034bond on Friday.