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The bullish steepening of the U.S. Tsy curve ultimately drove Aussie bond futures in overnight dealing, although the contracts deal a little off their overnight peaks in early Sydney trade, with that move likely aided by the rally in U.S. e-minis that that we have alluded to elsewhere.

  • YM prints +15.0, while XM is +11.5 at typing. Bills run 9-19bp richer through the reds, shy of their overnight highs, bull flattening.
  • Note that most still see a 50bp hike at next week’s RBA decision as a sure thing, although the recent miss in Q2 headline CPI, recession-related worry in the U.S. and post-FOMC reaction leaves OIS pricing ~48bp of tightening come the end of next week’s decision (~10bp below pre-CPI levels and nearly 20bp off the mid-July peak). Yesterday’s retail sales data provided a fresh sign of the headwinds for consumers, and was accompanied by a downside revision to the previous print (remember, these monthly releases are nominal, so don’t reflect real rates of consumption which will have been hit by the surge in inflation, Q2 real retail sales will hit next week). The RBA has highlighted its focus on household spending in recent months.
  • PPI and private sector credit data headline the domestic data docket ahead of the weekend, while A$1.0bn of ACGB Nov-33 supply and the release of the weekly AOFM issuance slate are also due.
  • A quick reminder that NSW observes a state holiday on Monday.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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