Cheaper With US Tsys Ahead of RBA Minutes

ACGBs are weaker (YM -7.0 & XM -5.0) following the negative lead from US tsys in NY trading. Although Treasury yields briefly dipped after the release of a weaker-than-expected Empire Manufacturing Index, they quickly rebounded and held steady for the remainder of the session. The market saw a surge of corporate issuance, which added pressure on rates, and more is expected tomorrow.

• Additionally, comments from Fed Bostic (non-voter) on sticky inflation not coming down fast enough put further downward pressure on bond prices.
• Meanwhile, Fed Funds implied rates rose higher on the day, ahead of the release of US retail sales data and another busy schedule of Fed speakers.
• Cash ACGBs opened 5-7bp cheaper with the AU-US 10-year yield differential +3bp at -3bp.
• Swap rates opened 5-7bp higher with the 3s10s curve flatter.
• The bills strip is steeper with pricing -3 to -7.
• RBA dated OIS opened 5-7bp firmer for meetings beyond September.
• The focus will be on the release of Australia's RBA Minutes for May with analysts looking for more insights after the unexpected 25bp hike. RBA Governor Lowe has already spoken publicly since the May decision stating that the board responded to signs of a tight labour market, persistent service inflation and changing asset prices.