Cheaper, US Tsys Pressured By Debt Ceiling Impasse & FOMC Minutes

ACGBs are cheaper (YM -5.0 & XM -2.5) after the cash US tsy curve bear steepened with yields 4-11bp higher. Tsys were pressured into the close as the US debt impasse continued with little progress made on Wednesday.

• The release of the minutes from the May FOMC meeting revealed a division among officials regarding their support for further interest rate hikes, emphasising the importance of maintaining flexibility.
• Fed Bostic's recent remarks, shared a short while ago, indicated that the Fed aims to avoid committing to specific rate adjustments and will rely on data to guide their decisions. Earlier during the New York session, Fed Waller expressed his inclination towards a rate hike in June, citing limited progress in curbing inflation
• Cash ACGBs opened 3-5bp cheaper with the AU-US 10-year yield differential at -7bp.
• Swap rates opened 2-4bp higher.
• The bills strip bear flattened with pricing -1 to -4.
• RBA dated OIS opened flat to 3bp firmer.
• The local calendar sees the April Westpac–MI Leading Index.
• In a speech to a Fixed Income Forum in Tokyo yesterday RBA Jacobs, Head of Domestic Markets, stated that the RBA is beginning to unwind its balance sheet, with the process likely to have several “interrelated effects” on the financial system. (link).