RBA Terminal Rate Pricing Ticks Higher, Lowe Due

Aussie bond futures stuck to relatively narrow ranges overnight, even in the face of the previously outlined bear flattening in U.S. Tsys. There has been a modest downtick at the re-open, likely representing some modest catch up to the move in Tsys, leaving YM -1.6 & XM -1.1.

• There hasn’t been much in the way of local news to move the needle.
• Today will see RBA Governor Lowe appear in Parliament as he delivers his semi-annual testimony, starting at 09:30 Sydney/00:30 London (expect this to consist of plenty of questions surrounding the future of monetary policy and the past performance of the RBA). Note that just under 40bp of tightening remains priced into RBA-dated OIS when it comes to the Bank’s October meeting, while terminal rate expectations have inched back up to ~3.90% early today, no doubt aided by the fresh cycle highs witnessed in market expectations of the U.S. Fed’s terminal rate.
• A$800mn of ACGB May-32 will be on offer at auction, with the AOFM’s weekly issuance slate due as well.
• Further afield, interest is set to fall on the latest round of monthly Chinese economic activity data as the world’s second largest economy continues to struggle in the face of localised COVID lockdowns and well-documented headwinds for the property sector.