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Little Changed Vs. Wednesday Settlement

AUSSIE BONDS

The aforementioned gyrations in U.S. Tsys drove Aussie bond futures in post-Sydney trade, with the major contracts finishing overnight dealing just below neutral levels. That leaves YM -1.0 & XM -1.5, just below late overnight levels shortly after the Sydney re-open. Bills sit somewhere between 1-4bp cheaper through the reds.

  • Wider central bank pricing gyrations continue to feed into RBA pricing at the margin, but the RBA path priced into markets ultimately is little changed vs. pre-August RBA levels (despite the notable tweaks to the statement to include previously outlined ideas, which presented a dovish tinge). Circa 40bp of tightening is priced into the OIS strip for the Bank’s September meeting, marginally below pre-RBA levels, with a year end cash rate of ~3.05% and terminal rate of ~3.30% currently priced. A reminder that the ‘Big 4’ all look for a 50bp rate hike at next month’s RBA decision.
  • The monthly trade balance data headlines the domestic docket on Thursday. Wider expectations look for a slight narrowing in the headline trade surplus in June, with the BBG median looking for a surplus of A$14.0bn vs. the record wide A$15.965bn seen in May.
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The aforementioned gyrations in U.S. Tsys drove Aussie bond futures in post-Sydney trade, with the major contracts finishing overnight dealing just below neutral levels. That leaves YM -1.0 & XM -1.5, just below late overnight levels shortly after the Sydney re-open. Bills sit somewhere between 1-4bp cheaper through the reds.

  • Wider central bank pricing gyrations continue to feed into RBA pricing at the margin, but the RBA path priced into markets ultimately is little changed vs. pre-August RBA levels (despite the notable tweaks to the statement to include previously outlined ideas, which presented a dovish tinge). Circa 40bp of tightening is priced into the OIS strip for the Bank’s September meeting, marginally below pre-RBA levels, with a year end cash rate of ~3.05% and terminal rate of ~3.30% currently priced. A reminder that the ‘Big 4’ all look for a 50bp rate hike at next month’s RBA decision.
  • The monthly trade balance data headlines the domestic docket on Thursday. Wider expectations look for a slight narrowing in the headline trade surplus in June, with the BBG median looking for a surplus of A$14.0bn vs. the record wide A$15.965bn seen in May.