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Some FOMC Pushback To CPI Reaction Likely

EURGBP TECHS

Trend Needle Still Points North

US OUTLOOK/OPINION

RBC: Time For The Doves To Spread Their Wings

STIR

BLOCK, SOFR Conditional Curve Steepener

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Cheaper As Tsys Soften

AUSSIE BONDS

Aussie bonds have cheapened further on the back of a move lower in U.S. Tsys, leaving YM and XM 5.0 and 4.0 weaker, respectively, operating below their respective overnight session lows. The ACGB cash curve has bear steepened, with the major benchmarks running 5.0bp to 9.5bp cheaper across the curve as the long end leads the way lower, while bills have held on to earlier losses, last trading -4 to -6 through the reds.

  • The latest round of ACGB Jun-51 supply was absorbed relatively smoothly, with the previously-flagged upsizing in supply accounting for the softer cover ratio (1.55x vs. 2.56x prev.). Pricing ultimately remained firm, with the weighted average yield printing 0.72bp through the prevailing mids (per Yieldbroker).
  • There was little in the way of major news flow to digest after the Sydney open. A quick reminder that weekend news flow saw Australian Treasurer Chalmers stress that the cost of living crisis will get worse, while he suggested that the recent RBA communique re: inflation hitting the 7% level before the end of the year was in the right ballpark. Chalmers also seemed to support calls for the RBA board to be more representative of the wider Australian community.
  • STIR markets continue to price in ~44bp of tightening for the July meeting, little changed on the day, with a cumulative ~240bp of tightening priced in for calendar ‘22.
  • The local economic data docket is virtually empty tomorrow (weekly ANZ-Roy Morgan consumer confidence data is due), with retail sales expected to provide the first point of interest later this week on Wednesday.

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