Little Changed, US Tsys Finished Mixed, CPI Monthly Due

ACGBs (YM -1.0 & XM -0.5) are little changed as US tsys gave up early gains to finish slightly mixed. The fear of a higher-for-longer policy stance by global central banks continued to weigh and was exacerbated after JPMorgan's Dimon noted the potential for a 7% rate as a worst-case scenario. Additionally, the threat of a government shutdown this weekend and Moody's ratings warning probably left buyers sidelined.

• (AFR) The US banking system is coming under intense pressure from rising interest rates, as rising deposit rates squeeze banks’ net interest rate margins, while losses on their massive bond portfolios continue to ratchet higher. (See link)
• Cash ACGBs have opened unchanged, with the AU-US 10-year yield differential 2bps higher at -13bps.
• Swap rates are little changed.
• The bills strip has bear-steepened, with pricing -1 to -4.
• RBA-dated OIS pricing is flat to 2bps firmer across meetings.
• Today the local calendar sees CPI Monthly release for August. Consensus expects 5.2% y/y after 4.9% in July. If correct, this will be the first re-acceleration in inflation in 4 months. Fuel prices will be a big driver for the jump in August, while rent inflation is likely to be persistent.
• Today the AOFM plans to sell A$800mn of the 2.25% 21 May 2028 bond.