Richer, Global Yields Lower Led By Gilts & Bunds

ACGBs are stronger (YM +5.0 & XM +6.0) with cash US tsys finishing 3-5bp richer in NY trade. Tsys sold off briefly following stronger-than-expected housing data but quickly reversed aided by lower UK and European yields. After a challenging period, UK gilt yields experienced a decrease of 14-16bp, ahead of two major risk events: today’s release of UK CPI figures and the forthcoming BoE meeting on Thursday. The 10-year bund yield also dropped by 11bp as members of the ECB Governing Council shared their individual perspectives.

• Weakness on Wall Street supported the bid for US tsys. Some beliefs the market is overbought and concerns over China's sagging growth with uncertainty over the degree of official support weighed a bit on investor sentiment.
• Focus turns to Fed Chairman Powell's semi-annual testimony House Services Panel later today, though it's unlikely Chair Powell will deviate from last week's policy messaging.
• Cash ACGBs opened 6bp richer with the AU-US 10-year yield differential +2bp at +25bp.
• Swap rates are 4-5bp lower.
• Bills are 1-5 richer across the strip.
• RBA-dated OIS pricing is flat to 4bp softer across meetings.
• The local calendar is light today with Westpac-MI Leading Index as the highlight.
• The AOFM plans to sell A$700mn of the 3.50% 21 December 2034 bond today.