Sharply Richer, Narrow Range In Sydney Session, US PPI Due

ACGBs are holding sharply richer (YM +10.0 & XM +7.0) in a narrow range in the Sydney session after tracking US tsys stronger following the release of lower-than-expected US CPI data. Without meaningful domestic drivers, local market participants have been on US tsys watch ahead of June US PPI and weekly Jobless Claims data later today.

• US cash tsys sit 4bp richer to 1bp cheaper across the major benchmarks, with the curve twist steepening, pivoting on 20s. The short end of the curve marginally extended its move seen post-US CPI yesterday, Ranges have been narrow with little follow-through on moves for the majority of the session. Little meaningful macro news flow crossed in Asia today.
• Cash ACGBs are 7-9bp richer with the AU-US 10-year yield differential +3bp at +21bp.
• Swap rates are 5-8bp lower with the 3s10s curve steeper.
• The bills strip bull steepens with pricing +3 to +11.
• RBA-dated OIS pricing is 4-10bp softer for meetings beyond August.
• (ABC) Opposition Leader Peter Dutton says two of the government's potential picks to replace Philip Lowe as Reserve Bank governor would not be able to operate independently because of their established relationships with the government. (See link)
• Tomorrow the local calendar sees no data.