Cheaper But Off Worst Levels, CPI Monthly Data Tomorrow

ACGBs (YM -6.0 & XM -9.5) remain sharply cheaper but are above Sydney session lows. The local calendar has been light, ahead of the CPI Monthly release for August tomorrow. Accordingly, local participants have likely been on headlines and US tsys watch.

• US tsys have marginally extended yesterday's losses, with the 10-year yield printing a fresh cycle fresh in the Asia-Pac session. This leaves cash tsys ~2bps cheaper across the major benchmarks.
• Cash ACGBs are 5-9bps cheaper, with the AU-US 10-year yield differential unchanged at -15bps.
• Swap rates are 3-8bps higher, with the 3s10s curve steeper.
• The bills strip has bear-steepened, with pricing -1 to -5.
• RBA-dated OIS pricing is flat to 2bps firmer across meetings, with terminal rate expectations at 4.32% (+25bps).
• (AFR) Some suggest the new RBA Governor Bullock, instead of raising interest rates, will soon be lowering them. Yet monetary policy in Australia is not as tight as in most economies. That does not seem justified by recent Australian data. (See link)
• Tomorrow the local calendar sees CPI Monthly release for August. Consensus expects 5.2% y/y after 4.9% in July.
• Tomorrow the AOFM plans to sell A$800mn of the 2.25% 21 May 2028 bond.