Slightly Cheaper, Focus On Wednesday’s CPI Monthly

ACGBs (YM -2.0 & XM flat) are slightly cheaper after dealing in narrow ranges in a data light Sydney session.

• Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after finishing last week with a directionless NY session.
• Cash ACGBs are flat to 1bp cheaper, with the AU-US 10-year yield differential at -4bps.
• Swap rates are flat.
• The bill strip pricing is flat to -1.
• RBA-dated OIS pricing is little changed. A cumulative 14bps of easing is priced by year-end.
• Tomorrow, the local calendar will see Westpac Consumer Confidence. The slightly more hawkish sounding RBA on June 18 is likely to keep sentiment weak and maybe even drive a further fall.
• However, the focus will be on May’s CPI Monthly on Wednesday. The May CPI is expected to post an increase of 3.8% y/y up from 3.6% the previous month. Forecasts range from 3.5% to 4.0% with most around 3.7-3.8%. April did not include a comprehensive update of the services components, but May will. Housing costs, insurance, electricity prices and personal services are likely to rise.
• RBA Assistant Governor Kent speaks on Wednesday at 0935 AEST and Deputy Governor Hauser on Thursday at 2000 AEST.