Sharply Cheaper, US Tsys Look Through Lower PCE Data

ACGBs (YM -8.0 & XM -10.0) are sharply cheaper after US tsys were pressured into quarter-end. US tsy yields fell after the PCE data. The 2-year yield dropped 6bps, to an intra-day low of 4.66%, before rebounding sharply to end the session at 4.75%. The US 10-year also rallied before finishing 11bps cheaper at 4.40%. It appeared quarter-end positioning outweighed Friday's dovish reaction to Core PCE inflation.

• The core PCE deflator rose 0.1% from the prior month, the smallest increase since November 2020, and matched consensus estimates. This took the annual core rate to 2.6%.
• According to exit polls, the first round of voting for France’s National Assembly has produced results broadly in line with surveys. Marine Le Pen’s right-wing National Rally (RN) won with 33.5% of the vote, less than expected, but as there will be a second round of voting on July 7, it remains unclear if her party will win a majority of seats.
• Judo Bank Mfg PMI fell to 47.2 from 49.7 in May.
• According to CoreLogic, Sydney’s dwelling values added 0.5% in the month, taking the median to a fresh high of A$1.17mn. Overall, dwelling values rose 0.7% in Australia’s major cities.
• Cash ACGBs are 8-12bps cheaper.
• Today, the local calendar will also see the MI Inflation Gauge and ANZ Job Advertisements data.