Richer As PMI Data Pushed Global Yields Lower

ACGBs are stronger (YM +6.0 & XM +5.0) after US tsys finished richer in trading ahead of the weekend. Underwhelming PMI data, lower EGB yields and a decline on Wall Street all worked to support US tsys.

• On Friday, 2-year US tsy yields climbed above 4.8%, reaching their highest point since March. However, they later declined to 4.70%, in line with the movements observed in Bunds after the release of disappointing PMI data. Ultimately, the 2-year tsy yields closed at 4.74%. Meanwhile, the 10-year Treasuries also displayed a similarly broad range of fluctuations and concluded the session at 3.73%.
• Advance PMIs for June suggest that the Eurozone economy has slowed sharply with the service sector PMI dropping more than expected and the manufacturing PMI falling further into contractionary territory.
• In the US, the manufacturing PMI fell more than expected into contractionary territory and sits just above the lows from December of last year.
• Cash ACGBs opened 5-7bp richer with the AU-US 10-year yield differential at +20bp.
• Swap rates are 5-7bp lower with the 3s10s curve steeper.
• The bills strip bull flattens with pricing +4 to +7.
• RBA-dated OIS pricing is 1-4bp softer across meetings.
• The local calendar is light today ahead of CPI Monthly on Wednesday.