Cheaper After RBA Forecast Update, Eyeing US Tsys Ahead Of Payrolls

ACGBs (YM -8.0 & XM -8.0) are 1-3bp cheaper after the RBA released updated forecasts in the latest Statement on Monetary Policy (SoMP). The forecasts show inflation returning to within its 2-3% target band at the end of 2025. In May, the RBA predicted inflation will hit 3% by mid-2025 but that has now edged up to 3.1%.

• Cash ACGBs are 7-8bp cheaper on the day with the AU-US 10-year yield differential +5bp at +1bp.
• Swap rates are 4-5bp higher on the day with EFPs tighter.
• The bills strip has bear flattened with pricing flat to -7.
• RBA-dated OIS pricing is 1-3bp firmer across meetings after the SoMP release.
• (AFR) China has agreed to lift tariffs on imports of Australian barley from Saturday in a key concession to more than $20 billion worth of sanctions on exports imposed at the height of political tensions between Canberra and Beijing.
• On Monday the local calendar sees ANZ-Indeed Job Ads. It is worth noting that NSW has a bank holiday on Monday.
• Later today sees the release of US Non-Farm Payrolls, with +200k consensus versus +209k prior. (See MNI NFP Preview here)
• The AOFM announced plans to sell A$700mn of the 2.75% 21 June 2035 bond on Wednesday, 9 August 2023.