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Richer, Long-End US Tsy Yields Higher But Off Session Highs

AUSSIE BONDS

ACGBs (YM +6.0 & XM +5.5) are richer after long-end US tsy yields finished higher but off NY session highs. Amidst a backdrop of light newsflow, the US 10-year rate traded as high as 4.325% overnight, edging within a single basis point of the 2022 high. Meanwhile, the 30-year rate climbed to 4.42%, surpassing the peak from the previous year and attaining its highest level since 2011. The 2-year rate has maintained its position just below 5%.

  • The US tsy 10-year yield finished at 4.27%, +2bp on the day, but 3bp below where it was at yesterday’s Sydney close.
  • Cash ACGBs opened 6-7bp richer with the AU-US 10-year yield differential 3bp tighter at -1bp
  • Swap rates are 4-6bp lower with the 3s10s curve 2bp steeper.
  • The bills strip has bull flattened with pricing flat to +6.
  • (AFR) Weaker-than-expected jobs figures for July reinforced bets the Reserve Bank of Australia is done with interest rate increases, and markets are pricing in just a 5 per cent chance of a rate rise in September. (See link)
  • RBA-dated OIS pricing is 1-5bp softer for meetings beyond October. The market currently attaches a 2% chance of a 25bp hike in September.
  • Today the local calendar is empty today.
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