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Futures Dealing Slightly Stronger Ahead Of RBA Decision

AUSSIE BONDS

ACGBs (YM flat & XM +2.5) are sitting slightly stronger after June building approvals decline 7.7% m/m (-8.0% est) and June home loan approvals print -1.0% m/m versus +1.8% est. Nevertheless, ACGB futures are 2-3bp off Sydney session bests ahead of today’s RBA policy decision.

  • Also just released, Caixin manufacturing PMI surprises on the downside with a print of 49.2 versus 50.1 est.
  • Cash ACGBs are flat to 1-3bp richer with the 3/10 curve flatter and the AU-US 10-year yield differential unchanged at +7bp.
  • Swap rates are 2-3bp lower.
  • The bills strip has twist flattened with pricing -3 to +2.
  • RBA-dated OIS pricing is flat to 4bp firmer across meetings with Feb’24 leading. The market attaches a 35% chance of a 25bp hike at today's meeting.
  • (AFR) The moderation in house price growth in July will be welcomed by the Reserve Bank, which has been worried that the surprise pick-up in prices this year could boost consumption and keep upward pressure on inflation. (See link)

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