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Richer, Narrow Ranges, WPI Failed To Move Market

AUSSIE BONDS

ACGBs (YM +4.0 & XM +4.5) are richer but little changed after today’s data drop (Q2 Wage Price Index, consumer sentiment and business confidence).

  • Cash US tsys are slightly richer in today’s Asia-Pac session, ahead of US PPI data. PPI data will be scrutinised for categories that feed through to the Fed’s preferred inflation gauge, the PCE Deflator.
  • US CPI is due for release on Wednesday. Consensus sees core CPI at 0.2% m/m in July after the far softer than expected 0.065% m/m in June, with a mild skew towards a “low” 0.2% per MNI’s compilation of sell-side previews. (See MNI CPI Preview here)
  • Cash ACGBs are 4-5bps richer on the day, with the AU-US 10-year yield differential at +9bps.
  • Swap rates are 4-5bps lower.
  • The bills strip is slightly richer, with pricing +2 to +3.
  • RBA-dated OIS pricing is flat to slightly softer across meetings. A cumulative 21bps of easing is priced by year-end.
  • Tomorrow, the local calendar is empty apart from the AOFM’s planned sale of A$800mn of the 3.50% 21 December 2034 bond. A$700mn of the 2.25% 21 May 2028 bond is due to be sold on Friday.
  • The RBNZ Policy Meeting is tomorrow. 12 of 21 economists surveyed by Bloomberg expect no change, with 9 expecting a 25bp cut.

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