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Richer, Gov. Lowe's Testimony Soon, CPI Data Later


ACGBs are stronger (YM +6.0 & XM +5.5) after cash tsys finished NY trading with yields 7-12bp lower across major benchmarks and the curve steeper. Following the extended holiday weekend, investors were carefully assessing the consequences of the bipartisan agreement, which was announced on Saturday, and entails the suspension of the debt limit for the upcoming two years. Getting the deal to pass through a fractious Congress before the June 5 "X" date is the real challenge.

  • Cash ACGBs opened 6-7bp richer with the AU-US 10-year yield differential at -6bp.
  • Swap rates opened 5-7bp lower.
  • The bills strip is flatter with pricing flat to +8.
  • RBA dated OIS opened 1-6bp softer for meetings beyond June.
  • Today’s focus is RBA Lowe’s appearance before the Senate Economics Committee at 0000 BST / 0900 AEST. The session can be watched here.
  • There is April CPI data today as well with Bloomberg consensus expecting the annual rate to show a slight increase to 6.4%, with a range of 6.1% to 6.6%, compared to 6.3% in March.
  • The local calendar is also slated to release Construction Work Done (Q1), Private Sector Credit (April), and CoreLogic House Prices (May).
  • The AOFM plans to sell A$300mn of the 1.75% 21 June 2051 bond.

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