RBA Pricing Firms, Bonds Pressured

The softer U.S. Tsy impulse applied pressure to Aussie bond futures during overnight trade, after firmer than expected UK inflation data helped the space lower during the early rounds of post-Sydney dealing.

• That leaves YM -12.0 & XM -10.0 early today, with local participants facilitating a look through the respective overnight lows for the contracts in early Sydney dealing.
• Wider cash ACGB trade sees 8-11bp of cheapening, with the curve bear flattening.
• Bills run 6-14bp cheaper through the reds, bear steepening, with RBA dated OIS indicating a terminal rate of just over 4.20%, ~15bp or so firmer on the session, with 28bp of tightening priced for the Nov ’22 gathering, aided by hawkish Fed repricing and bond cheapening.
• The domestic labour market report is front and centre today, with a headline employment gain of +25.0K expected (vs. the prior +33.5K), while the unemployment rate and participation rates are seen steady at 3.5% & 66.6%, respectively (based on BBG estimates).
• Further afield, the monthly LPR fixings out of China will get some attention, although no changes are foreseen there.
• There will also be an eye on potential coupon cash deployment, with Friday providing the joint largest round of ACGB coupon payments seen through the year (A$4.87bn).