Cheaper After A Modest Sell-Off In US Tsys, Light Local Calendar

ACGBs (YM -3.0 & XM -3.0) are cheaper after US tsys finished with modest losses after shedding early gains. Risk-on flows and incoming supply (2s, 5s, 7s and 2Y FRN) weighed.

• The political news that President Biden would not seek re-election, endorsing VP Harris, was taken cautiously. However, the chances of a Trump victory were pared slightly. The 2- and 10-year yields finished ~1bp higher.
• US equities rebounded, with the tech sector leading the gains after the recent rotation out of these stocks. The tech-heavy Nasdaq index is up ~1.5% against a ~1% rise in the S&P500.
• (AFR) Bloomberg said its latest Markets Live Pulse survey found that investors expect the current reporting season to reinvigorate the S&P 500. “Nearly two-thirds of the 463 respondents to the questionnaire expect earnings to boost the US equities benchmark. About half of the participants predict that Corporate America’s scorecard will be better in the coming months than in the first half of the year.”
• Cash ACGBs are 2-3bps cheaper, with the AU-US 10-year yield differential at +9bps.
• Swap rates are 2-3bps higher.
• The bills strip has bear-steepened, with pricing flat to -2.
• RBA-dated OIS pricing is little changed. Terminal rate expectations sit at 4.43%.
• Today, the local calendar is empty.