Drifting Cheaper

ACGBs (YM -4.0 & XM -5.5) are cheaper and at/or near Sydney session cheaps. With the domestic calendar empty today, the local market has drifted cheaper with US tsys in today’s Asia-Pac session.

• Cash US tsys are dealing ~2bps cheaper compared to the NY close after Atlanta Federal Reserve President Raphael Bostic said he is still not thoroughly convinced inflation is on track to the central bank's 2% target and will need to see continuing evidence of ebbing prices pressures to build greater confidence: MNI (See link)
• Cash ACGBs are 4-5bps cheaper, with the AU-US 10-year yield differential 3bps higher at -7bps.
• Swap rates are 4-5bps higher, with EFPs little changed.
• The bills strip has bear-steepened, with pricing flat to -4.
• RBA-dated OIS pricing is flat to 3bps firmer across meetings. A cumulative 36bps of easing is priced by year-end.
• (AFR Joye) This column has been banging the table relentlessly about the fact that the path for global services inflation will determine what happens to asset prices in 2024. The argument has been that most of the improvement in the inflation pulse has been an artefact of temporary goods deflation, which cannot continue in perpetuity. (See link)