Cheaper But Narrow Ranges Ahead Of CPI Data, BoJ & FOMC Policy Decisions Tomorrow

ACGBs (YM -2.0 & XM -1.5) are cheaper after dealing in relatively narrow ranges.

• Outside of the previously outlined Building Approvals, there hasn't been much in the way of domestic drivers to flag.
• Tomorrow the local calendar will see Q2/June CPI and June Retail Sales data.
• Headline CPI rose to 4.0% and trimmed mean to 4.4% in May. If the data prints in line with RBA May expectations of 3.8% for headline and trimmed mean, requiring 1.0% q/q and 0.8% quarterly rises, then rates are likely to be unchanged at the August 6 meeting.
• Retail sales for June are forecast to rise for the third straight month. Sales were stronger than expected in May rising 0.6% m/m and consensus is at +0.2% for June.
• Following tomorrow’s domestic data drop, the market faces policy decisions from the BoJ and the FOMC.
• The BoJ Policy Meeting will be keenly watched for any steps towards monetary policy normalisation. See MNI BoJ Preview here.
• Cash US tsys are slightly cheaper in today’s Asia-Pac session.
• Cash ACGBs are 1-2bps cheaper, with the AU-US 10-year yield differential at +11bps.
• Swap rates are 1-2bps higher, with the 3s10s curve flatter.
• Bills strip pricing is -2 to -4.
• RBA-dated OIS pricing is slightly firmer across meetings. Terminal rate expectations sit at 4.43%.