Little Changed, US Tsys Richer, AU House Prices Rise Again

ACGBs are little changed (YM flat & XM +0.5) after cash tsys finished 3-7bp richer across major benchmarks, supported by weaker economic data, softer equity markets, and Fedspeak (Jefferson/Harker) pushing back against a June hike.

• As far as FOMC dated OIS was concerned, Fedspeak weighed most heavily, especially for June OIS pricing with most of the day’s decline coming after Jefferson/Harker, to leave just +8bp priced, whilst it no longer fully prices a hike come July with +20bp.
• Cash ACGBs opened flat to 1bp richer with the AU-US 10-year yield differential at -5bp.
• Swap rates opened flat to 1bp higher with the 3s10s curve flatter.
• The bills strip sees pricing -3 to +2.
• RBA dated OIS opened little changed across meetings.
• According to CoreLogic, Australia’s house prices climbed for a third straight month in May, suggesting further interest-rate increases may be needed to cool resurgent demand that threatens to exacerbate inflationary pressures in the economy. Prices in bellwether Sydney jumped 1.8%, the city’s biggest increase since September 2021. (link)
• The local calendar sees Judo Bank PMIs (May F) and Private Capex Expenditure (Q1) scheduled for release today. Expectations point towards increases in capital expenditure for both equipment and building & structures. Additionally, the second estimate for planned capital expenditure in 2023-24 will be disclosed.