Cheaper, Off Worst Levels, Awaiting FOMC Decision

ACGBs (YM -5.0 & XM -4.5) are weaker, but off session cheaps. The local calendar has been light today, with Westpac leading index (-0.4% m/m) as the only release. Accordingly, local participants have likely been on headlines and US tsys watch ahead of the FOMC decision later today.

• Narrow ranges have persisted in early US tsy dealing in the Asia-Pac session, with no meaningful macro newsflow crossing. Cash US tsys sit little changed across the major benchmarks.
• Cash ACGBs are 4-5bps cheaper, with the AU-US 10-year yield differential at -15bps.
• Swap rates are 4bps higher, with EFPs little changed.
• Bills strip pricing is -6 to -7 for contracts beyond Dec-23.
• RBA-dated OIS pricing is 4-6bps firmer across meetings beyond Dec’23.
• (AFR) The oil price heading to $US100 a barrel could force the RBA to raise interest rates as soon as Melbourne Cup Day, spurning the bond market, which has pushed out expectations for another rate increase to next year. Economist Warren Hogan, managing director of EQ Economics, assumes the central bank will lift the cash rate to 4.35 per cent from the current setting of 4.1 per cent by November, with energy prices adding to the risk. (See link)