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Richer, Subdued Start To Week, Employment Report On Thursday

AUSSIE BONDS

ACGBs (YM +1.0 & XM flat) are dealing slightly richer after a relatively subdued start to the trading week.

  • With cash US tsys not trading during today’s Asia-Pac session due to a holiday in Japan and the domestic calendar largely empty until Thursday’s release of the June Employment Report, local market trading has been light.
  • Expectations of sustained strong pricing at today's auction proved accurate, as the weighted average yield printed 0.67bps through prevailing mids and the cover ratio at 3.3500x printed around levels seen at recent longer-dated auctions.
  • Cash ACGBs are flat to 2bps richer, with the AU-US 10-year yield differential at +14bps.
  • Swap rates are flat to 2bps lower, with the 3s10s curve steeper.
  • The bills strip is stronger, with pricing +2 to +3.
  • RBA-dated OIS pricing is 3bps softer for 2025 meetings. Terminal rate expectations drop to 4.41% versus its recent high of 4.52%.

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