Cheaper, Jobless Claims & A Cautious Fed Schmid Weigh On US Tsys

ACGBs (YM -5.0 & XM -4.5) are weaker after US tsy yields were pushed higher across the curve, led by the short end. The US 2-year rate was up 7bps to 4.00%, with the 10-year yield finishing 5bps higher at 3.85%.

• Steady to mixed data and cautious comments from Fed’s Schmid weighed on US tsys ahead of the Jackson Hole Symposium.
• The Fed could be approaching the time to reduce interest rates, but it must make sure inflation is coming down sustainably to its 2% target, Fed Schmid said Thursday.
• US initial jobless claims were in line at 232k, with the four-week moving average looking like a plateau rather than a collapse.
• Expected Fed rate cuts were pared but with 29bps of easing still priced for September. Pricing for the three remaining meetings of the year cumulates to 93bps, down from 100bps priced on Wednesday.
• Cash ACGBs are 4bps cheaper, with the AU-US 10-year yield differential at
• Swap rates are 3-4bps higher.
• The bills strip has bear-steepened, with pricing flat to -4.
• RBA-dated OIS pricing is flat to 5bps firmer. A cumulative 21bps of easing is priced by year-end.
• Today, the local calendar is empty apart from the AOFM’s planned sale of A$700mn of the 2.75% 21 November 2028 bond.