Richer But Off Best Levels

ACGBS are dealing stronger (YM +4.0 & XM +5.5) but well off Sydney session highs.

• NAB business conditions were unchanged at +9 in June with business confidence +3 at flat. Earlier, Westpac consumer sentiment rose 2.7% m/m to 81.3 with current conditions -0.6% m/m at 70.5. This moves us away from recent lows, but sentiment has been stuck at depressed levels since the middle part of 2022. Westpac attributes the July rise to lower inflation reads, rather than the early July pause by the RBA.
• While the slight firming in consumer and business sentiment could have been a contributing factor, the push away from the session’s best levels has been in line with US tsys’ move away from its early session highs in Asia-Pac trade. There has been little meaningful macro news flow thus far.
• Cash ACGBs are 5bp richer with the AU-US 10-year yield differential +2bp at +23bp.
• Swap rates are 5-6bp lower with the 3s10s curve little changed.
• The bills strip is richer with pricing +2 to +6, late whites /early reds leading.
• RBA-dated OIS pricing is 1-4bp softer across meetings. The market attaches a 59% chance of a 25bp hike at the August meeting.