Cheaper, Subdued US Tsy Trading Ahead Of Weekend, Light Local Calendar

In roll-impacted trading, ACGBs (YM -3.4 & XM -3.2) are weaker after muted trading for US tsys ahead of the weekend. US tsys gave up early gains as investors potentially looked ahead to the upcoming supply this week. There is $44 billion of 3-year supply later today ahead of 10 and 30-year auctions later in the week. US tsys finished 4bps cheaper to flat across major benchmarks, with the curve flatter.

• Investors betting Australia’s dollar will continue to weaken may want to reconsider. Analysts see the currency rebounding on China's stimulus and RBA rate-hike prospects. Domestic factors aside, given the Australian dollar’s correlation with the yuan, Bloomberg reports that Macquarie Group sees it benefiting from China’s policies, such as influencing the markets to discourage yuan selling, and prospects of Federal Reserve rate cuts in 2024. (See link)
• Cash ACGBs have opened 3bp cheaper with the AU-US 10-year yield differential at -15bp.
• Swap rates are 3bps higher.
• The bills strip has bear-steepened, with pricing -1 to -4.
• RBA-dated OIS pricing is little changed.
• Today the local calendar is empty, ahead of Westpac Consumer Confidence and NAB Business Confidence tomorrow, CBA Household Spending on Wednesday and the August Employment Report on Thursday.