Hawkish Global Central Banks Drive Yields Higher, Light Local Calendar

ACGBs are weaker (YM -4.0 & XM -2.5) as central banks take centre stage and push global yields higher. The BoE and Norges Bank surprise with 50bp hikes and maintain their tightening biases. The BoE hike to 5.0% brings the total tightening this cycle to 475bp, with market pricing pointing to a 6%+ policy rate before the end of the year.

• During Fed Chair Powell's second day of policy testimony to Congress, he reiterated the prevailing view that if the economy continues to perform as expected, it would be appropriate to raise rates again this year.
• The BoC published the June Minutes, revealing the underlying strength of the Canadian economy and concerns regarding the trajectory of inflation was likely to deliver more tightening.
• Cash ACGBs opened 3-4bp cheaper with the AU-US 10-year yield differential at +20bp.
• Swap rates are 3-4bp higher with the 3s10s curve flatter.
• Bills are weaker across the strip with pricing -3 to -7.
• RBA dated OIS are 3-11bp firmer for meetings beyond October with December leading. Terminal cash rate expectations return to 4.60%.
• The local calendar sees Judo Bank PMI Preliminary data as the highlight.
• The next major data is the release of the CPI Monthly next Wednesday.