Slight Bear-Flattener, US Tsys Finish Slightly Cheaper After FOMC Minutes

ACGBs (YM -3.0 & XM +0.5) are cheaper after US tsys finished mostly weaker on Wednesday. The curve twist-flattened, with yields 4bps higher to 1bp lower. The 10-year yield was up 1bp at 4.42%, while the just auctioned 20-year was flat at 4.64%.

• US tsys weakened early in line with higher EGBs after higher than expected UK CPI, with little reaction to April’s Existing Home Sales miss.
• There was no major reaction to the May 1 FOMC minutes. “Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%,” the minutes said.
• May’s Judo Bank Preliminary PMIs printed: Mfg unchanged at 49.6; Services falls to 53.1 from 53.6; and Composite falls to 52.6 from 53.
• Cash ACGBs are flat to 2bps cheaper, with the AU-US 10-year yield differential 2bps higher at -14bps.
• Swap rates are 1-4bps higher, with the 3s10s curve flatter.
• The bills strip has bear-steepened, with pricing -1 to -4.
• RBA-dated OIS pricing is 3-6bps firmer for meetings beyond September. Only 6bps of easing is priced by year-end.
• Today, the local calendar will also see Consumer Inflation Expectations data.