Little Changed, US Tsys Subdued Ahead Of The Weekend, Q2 CPI On Wednesday

ACGBs (YM +1.0 & XM flat) are little changed after US tsy trading was subdued going into the weekend and ahead of Wednesday’s FOMC policy decision. While a 25 bp rate hike is all but done, Fed funds futures are showing about a 30% chance for a second 25bp tightening later in the year. Cash US tsys finished dealing ~1bp richer across the major benchmarks on Friday. A recovery off session lows was facilitated by source reports which pointed to a deal on Russian grain.

• Cash ACGBs opened unchanged with the AU-US 10-year yield differential at +18bp.
• Swap rates are also dealing little changed.
• Bills are trading mixed with pricing -1 to +1.
• RBA-dated OIS opens with pricing slightly softer across meetings. A 62% chance of a 25bp hike is priced for August.
• Today the local calendar sees Judo Bank PMI data ahead of Q2 CPI on Wednesday. Bloomberg consensus expects headline CPI to print +1.0% q/q (5.5% y/y) versus +1.4% q/q (5.6% y/y) in Q1. Power rebates are holding down inflation while goods prices continue to rise. Trimmed Mean CPI is forecast to print +1.1% q/q (6.0% y/y) from +1.2% (6.6% y/y) in Q1, +1.7% in Q4 and +1.9% in Q3.