Bear Steepening With US Tsys, RBA Gov Bullock Appearing Before Senate Committee

ACGBs (YM -1.0 & XM -8.5) are cheaper with a steepening bias. This trend is consistent with the bear-steepening of the US tsys curve seen during yesterday’s NY session, a move prompted by expectations of next week's announcements regarding larger auction sizes, coupled with lacklustre demand metrics witnessed at the US$52bn 5-year note auction. Additionally, the sell-off was bolstered by unexpectedly robust data on new home sales.

• US tsy 10-year yield rose 13bps to 4.96%. It has now retraced more than half of the decline from the cycle high above 5% earlier in the week.
• RBA Governor Bullock and Assistant Governor Kent are currently appearing before the Senate Economics Committee. Initial comments include “CPI came out about where we thought it would” and “we’ll have a reflection on what the CPI means for forecasts”. It can be viewed here.
• Cash ACGBs are 1-9bps cheaper on the day, with the AU-US 10-year yield differential 1bp higher at -15bps.
• The swaps curve has bear-steepened, with rates flat to 10bps higher.
• The bills strip has bull-steepened, with pricing flat to +5.
• In response to Governor Bullock’s initial remarks, RBA-dated OIS pricing is 4-6bps softer across meetings.
• Today, the local calendar shows Terms of Trade data for Q3.