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AUSTRALIA DATA

Price Developments Point To Higher Inflation Expectations

AUSSIE 3-YEAR TECHS

(Z2) Sell-Rallies Theme Intact

AUSSIE BONDS

Firmer & A Touch Steeper

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NZGBs Firmer On Offshore Lead

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Risk Off Move Hurts A$, Focus on US CPI Now

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BA Yields Unwind Week's Climb, GDP Data Comes Into Focus

CANADA
  • BA yields are down 14-15bps in late 2023/24 contracts despite lagging Eurodollars, but this only takes yields back to Friday’s close.
  • Front rates are less impacted (BAZ2 yields -5.5bps), continuing to price an additional 25bp hike vs after the Sep 7 BoC decision through to the Jun’23 contract (chart). That crudely implies a policy rate peaking around 4%, from 3.25% currently and with BoC-dated OIS pricing a 45bp hike for Oct 26.
  • There is still one more labour & CPI report plus the BoC survey to come before then, but more immediately is tomorrow’s July GDP, although external factors are likely to continue to play an oversized role in the meantime.
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  • BA yields are down 14-15bps in late 2023/24 contracts despite lagging Eurodollars, but this only takes yields back to Friday’s close.
  • Front rates are less impacted (BAZ2 yields -5.5bps), continuing to price an additional 25bp hike vs after the Sep 7 BoC decision through to the Jun’23 contract (chart). That crudely implies a policy rate peaking around 4%, from 3.25% currently and with BoC-dated OIS pricing a 45bp hike for Oct 26.
  • There is still one more labour & CPI report plus the BoC survey to come before then, but more immediately is tomorrow’s July GDP, although external factors are likely to continue to play an oversized role in the meantime.