Cheaper Again As US Tsy Yields Push To Fresh Cycle Highs On Firm Data

ACGBs (YM -8.0 & XM -8.0) are sharply lower again today, adding to post-RBA minutes weakness after US tsy yields lifted another chunky 8-15bps in the NY session. The belly led the cheapening, with the 5-year yield printing a high of 4.89%, its highest level since 2007.

• Issuance in Asia-Pac and Europe weighed on global bonds as US tsys extended Monday's moves linked to US efforts to prevent the Hamas/Israel conflict from spreading across the region. Losses extended after firmer than forecast retail sales and an upward revision to the Atlanta Fed's GDPNow to 5.4% Y/Y for Q3.
• FOMC dated OIS pricing of the terminal rate lifted to ~5.50% for Jan'24, with ~50bps of cuts by Sep'24.
• Cash ACGBs are 7-8bps cheaper, with the AU-US 10-year yield differential unchanged at -21bps.
• Swap rates are 8-9bps higher.
• The bills strip has bear-steepened, with pricing -2 to -9.
• RBA-dated OIS pricing is 3-8bps firmer for ’24 meetings. Terminal rate expectations push 3bps higher to 4.34%.
• Governor Bullock is participating (under way) in a “fireside chat” at the AFSA annual summit panel. RBA’s Smith, Head of the International Department, speaks at 1040 AEDT. There is also the Westpac leading indicator for September.