Richer, Gains Slightly Pared, Bounce In 10Y Futures Constructive

ACGBs remain sharply richer (YM +9.0 & XM +6.0) after slightly paring overnight gains following the release of lower-than-expected June US CPI.

• US tsys have ticked away from early Asia-Pac session highs. Ranges have been narrow and little meaningful macro news flow has crossed. This leaves cash tsys flat to 2bps richer across the major benchmarks, with the curve steeper.
• Defying previously bearish conditions, Aussie 10y futures rallied Wednesday, following US bond markets higher post-CPI, according to MNI's technicals team. The bounce this week has proved constructive but is yet to run into any meaningful resistance - first crossing at 96.440. This level will need to be challenged before any turn in the near-term outlook. Note that moving average studies remain in bear mode, highlighting the trend direction. The recent move lower opens the Dec 29 low of 95.670 for support. A break would accelerate losses.
• Cash ACGBs are 6-9bp richer with the AU-US 10-year yield differential +3bp at +21bp.
• Swap rates are 5-8bp lower with the 3s10s curve steeper.
• The bills strip bull steepens with pricing +3 to +11.
• RBA-dated OIS pricing is 3-10bp softer for meetings beyond August.
• MI July Inflation Expectations were unchanged at 5.2%.