Richer, Risk Off Supports US Tsys, PPI Data Due

ACGBs (YM +4.0 & XM +7.0) are richer after US tsys rallied 8-11bps on rising risk aversion. The S&P 500 is teetering on the edge of its first technical correction in over a year, with a nearly 10% decline from its July peak.

• US tsys firmed off session lows after the latest round of US data. Participants perhaps focusing on the weaker-than-forecast Core PCE Price Index (+2.4% q/q versus +2.5% est. and +3.7% prior) and Jobless Claims (210k versus 207k est. and 198k prior), which were at their highest in 5 months.
• Additional support was seen in the space after solid demand metrics for the latest 7-year auction.
• The ECB left policy unchanged at 4.5 per cent, ending a streak of 10 consecutive rate rises.
• Cash ACGBs are 4-7bps richer, with the AU-US 10-year yield differential 5bps higher at -4bps.
• Swap rates are 3-6bps lower, with the 3s10s curve flatter.
• The bills strip is slightly richer, with pricing flat to +2.
• RBA-dated OIS pricing is 1-3bps softer across meetings.
• On the data front today, we have Q3 PPI.
• Today, the AOFM plans to sell A$800mn of the 0.50% 21 September 2026 bond.
• Late yesterday, ICYMI, TCorp announced an A$500mn increase of the Feb-30 benchmark bond via reverse enquiry. The updated amount outstanding is A$11.691bn.