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Holding Cheaper, Narrow Range, Local & Global Calendars Light

AUSSIE BONDS

ACGBs (YM -4.0 & XM -6.5) are cheaper after trading in a relatively narrow range in the Sydney session. There has been no local data to digest today after yesterday’s surprisingly strong employment data. Accordingly, local participants have likely been on headlines and US tsys watch.

  • US tsys have marginally extended gains in recent dealing as Asia-Pac participants continue to fade yesterday's cheapening. Little meaningful macros news flow has crossed and ranges still remain narrow. This leaves cash tsys 1-2bps richer across the major benchmarks. There is a dearth of US economic data over the next two sessions, awaiting the latest FOMC policy announcement next Wednesday, July 26.
  • Cash ACGBs are 4-6bp cheaper with the AU-US 10-year yield differential -1bp at +17bp.
  • Swap rates are 3-6bp higher with the 3s10s curve flatter.
  • The bills strip bear steepens with pricing flat to -5.
  • RBA-dated OIS pricing is flat to 2bp firmer across meetings. A 62% chance of a 25bp hike is now priced for August.

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