July 12, 2024 02:34 GMT
Richer But Off Best Levels, US PPI Due Later Today
AUSSIE BONDS
ACGBs (YM +5.0 & XM +3.0) remain richer but are off Sydney session highs.
- With the domestic calendar empty, the local market has drifted lower in line with the ~2bp cheapening in cash US tsys in today’s Asia-Pac session. In the absence of news flow, this weakening most likely reflects some profit-taking after yesterday’s solid rally.
- The market’s focus is today’s June PPI and UofM Sentiment and the start of the latest equity earnings cycle: Wells Fargo, Bank of NY Mellon, JP Morgan and Citigroup headlining.
- Cash ACGBs are 3-5bps richer, with the AU-US 10-year yield differential at +11bps.
- Today’s ACGB Nov-29 supply was priced comfortably through mids. However, the cover ratio declined to 3.100x from 3.2286x prior.
- Swap rates are 3-5bps lower.
- The bills strip has bull-flattened, with pricing +2 to +6.
- RBA-dated OIS pricing is 3-7bps softer for meetings beyond August. Terminal rate expectations decline 3bps to 4.42%.
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