Cheaper With US Tsys, Awaits Consumer & Business Confidence Data

ACGBs (YM -3.0 & XM -4.0) are weaker. Long-end US tsys were heavy with yields higher again after short covering on Friday pushed them lower. News of August supply left US tsys heavy, especially after the debt warning from the Fitch downgrade. Simultaneously, expectations of the Federal Reserve concluding its tightening were challenged by hawkish statements from Fed Bowman. Additionally, Fed Williams maintained the potential for additional rate hikes.

• The US tsys curve bear steepened to -68 bps from -73.6 bps Friday and -92 bps a week ago. The 2-year yield was unchanged at 4.76% with the 10-year 5bp cheaper at 4.09%.
• Cash ACGBs opened 7-8bp richer after being closed yesterday for the NSW bank holiday. The AU-US 10-year yield differential is at +2bp.
• Swap rates are 2-5bp higher with the 3s10s curve steeper.
• The bills strip is slightly flatter with pricing flat to +2.
• RBA-dated OIS pricing is little changed.
• Today sees consumer and business confidence data. The Australian monthly consumer sentiment survey has been at deeply pessimistic, but since the last reading, the RBA kept the cash rate unchanged again. Business conditions will give an initial read on how the Fair Work Commission’s decision to lift the award wages by 5.75% is affecting businesses.