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AUSSIE BONDS: Slightly Weaker, Position-Squaring Ahead Of FOMC Decision

AUSSIE BONDS
RegionGlobalBulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM -2.0 & XM -1.5) are slightly weaker after US tsy yields moved modestly higher, which likely reflects some position squaring ahead of the FOMC. The US 10-year yield increased 3bps to 3.65% but is only marginally above the 3.60% cycle lows.

  • Retail Sales headline beat with a slight upward revision to prior data (0.1% M/M (vs -0.2%, 1.1% prior rev up 0.1pp). While stronger than consensus, it is unlikely to persuade or dissuade the Fed from cutting either 25bp or 50bp later today.
  • Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but there was a downward revision.
  • Cash ACGBs are1-2bps cheaper with the AU-US 10-year yield differential at +20bps.
  • Swap rates are 1-2bps higher.
  • The bills strip has bear-steepened, with pricing -1 to -4.
  • RBA-dated OIS pricing is slightly firmer across meetings. A cumulative 20bps of easing is priced by year-end.
  • Today, the local calendar will see the Westpac Leading Index. The calendar’s highlight will be August’s Employment Report tomorrow.
  • Today, the AOFM plans to auction A$1.0bn of the 3.75% 21 April 2037 bond, followed by a sale of A$500mn of the 3.25% 21 April 2029 bond on Friday.
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ACGBs (YM -2.0 & XM -1.5) are slightly weaker after US tsy yields moved modestly higher, which likely reflects some position squaring ahead of the FOMC. The US 10-year yield increased 3bps to 3.65% but is only marginally above the 3.60% cycle lows.

  • Retail Sales headline beat with a slight upward revision to prior data (0.1% M/M (vs -0.2%, 1.1% prior rev up 0.1pp). While stronger than consensus, it is unlikely to persuade or dissuade the Fed from cutting either 25bp or 50bp later today.
  • Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but there was a downward revision.
  • Cash ACGBs are1-2bps cheaper with the AU-US 10-year yield differential at +20bps.
  • Swap rates are 1-2bps higher.
  • The bills strip has bear-steepened, with pricing -1 to -4.
  • RBA-dated OIS pricing is slightly firmer across meetings. A cumulative 20bps of easing is priced by year-end.
  • Today, the local calendar will see the Westpac Leading Index. The calendar’s highlight will be August’s Employment Report tomorrow.
  • Today, the AOFM plans to auction A$1.0bn of the 3.75% 21 April 2037 bond, followed by a sale of A$500mn of the 3.25% 21 April 2029 bond on Friday.