Cheaper, AU-US 10Y Diff Close To Flat

ACGBs (YM -3.0 & XM -3.5) are cheaper after US tsys finished Thursday weaker, amid lingering concerns over the further erosion in the budget outlook after the CBO's Tuesday release of its updated forecasts.

• US tsys, however, finished mid-range following weaker-than-expected housing and claims data.
• Housing Starts (1.277M vs. 1.37M est), MoM (-5.5% vs. 0.7% est), Building Permits (1.386M vs. 1.45M est), MoM (-3.8% vs. 0.7% est). Weekly Claims a little higher than expected at 238k vs. 235k est, continuing claims 1.828M vs. 1.810M est.
• The benchmark 2-year yield finished 3bps higher at 4.74%, while the 10-year was 4bps cheaper at 4.26%.
• Judo Bank Flash PMIs for June have printed: Manufacturing at 47.5 vs. 49.7 in May; Services at 51.0 vs. 52.5 in May; and Composite at 50.6 vs. 52.1 in May.
• Cash ACGBs are 3-4bps cheaper. The AU-US 10-year yield differential is at -2bps, the highest level since February.
• Swap rates are 3bps higher.
• The bills strip has bear-steepened, with pricing -1 to -4.
• RBA-dated OIS pricing is 7-13bps firmer for meetings beyond August relative to pre-RBA levels. 6bps of easing is priced by year-end from an expected terminal rate of 4.38%.
• Today, the local calendar will also see the AOFM’s planned sale of A$700mn of the 1.5% Jun-31 bond.