Richer, Session Highs, Q1 GDP On Wednesday

ACGBs (YM +2.0 & XM +4.5) are holding stronger and at Sydney session highs.

• Outside of the previously outlined Fair Work Commission’s Minimum Wage Decision, Judo Bank PMI Mfg and MI Inflation Gauge, there hasn't been much in the way of domestic drivers to flag.
• (AFR) Monday’s minimum wage decision by the Fair Work Commission – an increase of 3.75 per cent – isn’t going to trigger a wage-price spiral. But with productivity going backwards, it’s another meaningful factor in keeping inflation stuck higher for longer. (See link)
• Cash US tsys have bull-flattened in today’s Asia-Pac session, with yield flat to 2bps lower, after Friday’s post-PCE-Deflator rally.
• Swap rates are 2-4bps lower, with the 3s10s curve flatter
• The bills strip has bull-flattened, with pricing flat to +4.
• RBA-dated OIS pricing is 1-6bps softer across meetings. This comes after no upside surprise in the much-awaited US PCE deflator data on Friday prevented further erosion in the Fed outlook. The US market is still priced for at least one rate cut this year, though it is not fully priced until December. In Australia, 4bps of easing is priced by year-end from an expected terminal rate of 4.36%.
• Tomorrow, the local calendar will see Q1’s Current Account Balance, Company Operating Profit and Inventories ahead of Q1 GDP on Wednesday.