Cheaper, US Tsys Pressured By Consumer Confidence Survey, China Data Drop Today

ACGBs are cheaper (YM -5.0 & XM -2.0) after US tsys finished trade ahead of the weekend 2-13bp cheaper across major benchmarks, with the curve flatter. Tsys were pressured on Friday trimming some of the post-CPI gains after the preliminary UofMich survey was stronger than forecast. Consumer Confidence ticked higher and inflation expectations rose.

• A reminder that cash tsys are closed in Asia today due to the observance of a national holiday in Japan.
• Year-end rate hike projections firmed on heavy short-end selling, with the Fed terminal rate holding at 5.395% in Nov'23. The market continues to price around a near 95% chance of a 25bp hike at the July FOMC. Reminder, the Federal Reserve entered a policy blackout at midnight Friday, running through July 27, the day after the next rate announcement.
• Cash ACGBs opened 2-3bp cheaper with the AU-US 10-year yield differential -4bp at +18bp.
• Swap rates are 2-4bp higher with the 3s10s curve flatter.
• The bills strip has bear steepened with pricing -1 to -5.
• RBA-dated OIS pricing is 2-5bp softer across meetings.
• There are no events in Australia today. The focus will be on the swathe of data from China including Q2 GDP, June IP, and retail sales.