Cheaper, Mid-Range, RBA Policy Decision Next Tuesday

ACGBs (YM flat & XM -4.5) are weaker, mid-range, after a relatively light domestic data docket. As previously outlined, private sector credit for August printed slightly better than expected (+0.4% m/m vs. +0.3% est. and +0.3% prior).

• Accordingly, domestic participants have likely been on headlines and US tsys/JGBs watch in Asia-Pac trade.
• US tsys have been pressured and are around session lows, 2-3bps cheaper across the major benchmarks.
• 10-year and longer-dated JGBs have pushed to their highest levels in the current cycle. The 10-year yield reached a post-YCC tweak peak of 0.774%. In response to this development, the BOJ conducted an unscheduled bond purchase of Y300bn in 5-to-10-year notes at market yields. The announcement caused JGB futures to initially spike higher, but these gains were swiftly reversed.
• The cash ACGB curve has twist-steepened, with yields 1bp lower to 4bps higher. The AU-US 10-year yield differential is 5bps higher at -9bps.
• The swaps curve has also twist-steepened, with rates -1bp to 4bps higher.
• The bills strip is slightly richer, with pricing +1 to +2.
• RBA-dated OIS pricing is slightly firmer across meetings. The market currently attaches a 13% chance of a 25bp hike for next week.
• Next week the local calendar sees a raft of second-tier data ahead of the RBA decision on Tuesday.