Cheaper, Narrow Range, Confidence Data Fails To Move Market

ACGBs (YM +1.0 & XM +1.0) are slightly stronger after trading in a narrow range during the Sydney session. The latest consumer and business confidence data failed to move the market.

• Nonetheless, it is noteworthy that the price and cost measures in the NAB business survey all rose in July which given higher wages, power and fuel prices since July 1 is unsurprising. What they do in the months ahead will be important. It remains unclear whether demand is strong enough for costs to be passed onto consumers fully, partially or not at all.
• Cash ACGBs are 11-14bp richer after being closed yesterday for the NSW bank holiday. The AU-US 10-year yield differential is at +1bp.
• Swap rates are flat to 2bp higher with the 3s10s curve flatter.
• The bills strip is slightly richer with pricing +1 to +2.
• RBA-dated OIS pricing is flat to 2bp softer.
• (AFR) Goldman Sachs is tipping the decline in iron ore prices will extend into the back end of this year as the physical market tips into an imminent surplus, and concerns intensify that China will ramp up cuts to its steel output. (See link)
• Tomorrow the local calendar sees no data releases.
• The AOFM does however plan to sell A$700mn of the 2.75% 21 June 2035 bond.