Richer With US Tsys, US ADP Data Disappoints, BoC Cuts

ACGBs (YM +5.0 & XM +4.5) are richer after 2- and 10-year US tsys finished 5bps richer at 4.72% and 4.28% respectively. The 2-year has fallen 15bps since Friday, with the 10-year down 22 bps.

• US tsys cheered further signs of a slowing job market and cooling price pressures, with the BoC's policy easing and plans for another in July bolstering hopes for global rate cuts. The ECB meeting is this evening with widespread expectations of an easing.
• ADP jobs gain was lower than expected at +152k vs. +175k est (192k prior down-revised to +188k).
• Fast two-way flow reported after mixed ISM Services data: Index higher than exp (53.8 vs. 51.0 est), lower Prices Paid (58.1 vs. 59.0 est), in-line Employment (47.1 vs. 47.2 est) and higher New Orders (54.1 vs. 53.2 est).
• US late-year rate cut projections gained vs. late Tuesday levels: Sep'24 cumulative -19.8bps (-19.3bps), Nov'24 cumulative -28.9bps (-27.8bps) and Dec'24 -47bps (-44.3bps).
• Cash ACGBs are 5bps richer, with the AU-US 10-year yield differential at -8bps.
• Swap rates are 5bps lower.
• The bills strip has bull-flattened, with pricing flat to +5.
• RBA-dated OIS pricing is 3-5bps softer for meetings beyond September. A cumulative 11bps of easing is priced by year-end.
• Today, the local calendar will see Home Loans Value and Trade Balance data.