Richer, US Tsys Rally On PPI & Claims Data

In roll-impacted dealings, ACGBs (YM +3.8 & XM +3.8) are richer with US tsys following much softer than expected US PPI data and a further increase in jobless claims.

• Hot on the heels of yesterday’s soft US CPI print, PPI final demand printed lower than expected at -0.2% vs. 0.1% m/m (2.2% y/y vs. 2.5% est), Ex Food and Energy m/m 0.0% vs. 0.3% est, (y/y 2.3% vs. 2.5%).
• (AFR) “Our mapping of the PPI and CPI data suggests that the core PCE deflator increased by only 0.11 per cent in May, well below the 0.32 per cent average increase in the first four months of this year,” said Ian Shepherdson at Pantheon Macroeconomics. “Our estimate points to a material downside surprise.”
• Meanwhile, weekly jobless claims were higher than expected at 242k vs. 225k est.
• US tsys also received a boost from a strong $22bn 30Y auction reopening. It stopped 1.6bp through.
• Cash ACGBs are 4bps richer, with the AU-US 10-year yield differential at -10bps.
• Swap rates are 4bps lower.
• The bills strip has bull-flattened, with +1 to +5.
• RBA-dated OIS pricing is 3-5bps softer for 2025 meetings. A cumulative 12bps of easing is priced by year-end.
• Today, the local calendar is empty.