Cheaper, Subdued Session Ahead Of Fed Chair’s Chat, RBA Decision On Tuesday

ACGBs (YM -5.0 & XM -7.0) are cheaper and at or near Sydney session lows. The session has been subdued with the domestic data drop failing to provide a market-moving event. Local participants have been content to sit on the sidelines ahead of Fed Chair Powell’s fireside chat later today. The FOMC media blackout begins Friday at midnight ET. The US calendar also sees the release of the ISM manufacturing index.

• Cash ACGBs are 6-8bps cheaper, with the AU-US 10-year yield differential 7bps wider at +16bps.
• Swap rates are 5bps higher, with EFPs around 2bps tighter.
• The bills strip bear-steepens, with pricing -1 to -8.
• RBA-dated OIS pricing is flat to 3bps softer across meetings.
• Next week, the local calendar sees Q3 Inventories and Company Profits on Monday, along with Melbourne Institute Inflation Gauge, Home Loans and ANZ-Indeed Job Ads monthly data. Judo Bank Composite & Services PMIs and Q3 BOP data drops on Tuesday ahead of the RBA Policy Decision. 23/24 economists surveyed expect the RBA to leave the cash rate at 4.35%. The market attaches a 9% chance of a 25bp hike next week. Q3 GDP is due for release on Wednesday.
• The AOFM plans to sell A$700mn of the 3.75% April 2037 on Wednesday.