Light Bear Flattening Impulse In Play

Tsys operate a little off session cheaps after limited two-way swings in lieu of an RBA rate hike that caught most off guard (based off surveyed views and market pricing, although many flagged what they deemed to be the close nature of the call pre-decision) and softer than expected German factory orders.

• A modest uptick in the Hang Seng (which has faded from best levels) provided some light pressure in early Asia-Pac trade, as participants continue to speculate on the potential, impending round of support for the struggling Chinese property sector.
• Cash Tsys are left 1.5-3.0bp cheaper with a bear flattening bias in play.
• FOMC-dated OIS shows 7bp of tightening for next week’s meeting and a cumulative 20.5bp of tightening through July, representing familiar levels. Beyond that ~30bp of cuts are priced through December.