Bear Steepening As Longer-Dated US Tsy Yields Push Higher In Asia-Pac

ACGBs (YM -5.0 & XM -12.5) have experienced significant weakness, primarily driven by the long end, as the bearish steepening of the US tsy curve extended into the Asia-Pac session. US tsys are flat to 5bps higher across benchmarks, with a steepening of the yield curve.

• On the other hand, shorter-term ACGBs have displayed better performance, partly due to an RBNZ that appeared less hawkish than anticipated. As expected, the RBNZ maintained the OCR at 5.50% but hinted at the possibility of keeping policy tight for a longer duration rather than tightening it further.
• (AFR) A surge in long-term bond yields has driven the Australian dollar to an 11-month low and may force Reserve Bank of Australia governor Michele Bullock to deliver further cash rate rises, economists say. (See link)
• Cash ACGBs are 5-12bps cheaper, with the AU-US 10-year yield differential 2bps lower at -18bps.
• Swap rates are 7-14bps higher, with the 3s10s curve steeper and EFPs 1bp wider.
• The bills strip has bear-steepened, with pricing +1 to -10.
• RBA-dated OIS pricing is 1-6bps softer across meetings, with November leading.
• Tomorrow the local calendar sees Trade Balance data for August. Terminal rate expectations sit at 4.34% (+27bps).