Slightly Cheaper With US Tsys, Fed Daly More Cautious On Cuts

ACGBs (YM -2.0 & XM -2.5) are slightly weaker after US tsys largely consolidated their moves following Chair Powell’s Jackson Hole speech ahead of the weekend. With little on the data docket until Thursday's claims data, the market took a breather.

• SF Fed Daly sounded a little more cautious over the pace/size of rate cuts while generally echoing Chairman Powell's "the time is now" opinion from Jackson Hole.
• Cash ACGBs are 2-3bps cheaper, with the AU-US 10-year yield differential at +6bps.
• Swap rates are 1-2bps higher.
• The bills strip is slightly cheaper, with pricing -1 to -2.
• RBA-dated OIS pricing is slightly firmer across meetings. A cumulative 25bps of easing is priced by year-end.
• Today, the local calendar is light ahead of July CPI Monthly tomorrow.
• July CPI data is expected to ease to 3.4% y/y from 3.8% but won’t include an update of most services components. This outcome requires the CPI to fall on the month.
• Today, the AOFM plans to sell A$100mn of the 0.25% 21 November 2032 index-linked bond. There is also a planned sale of A$800mn of the 3.50% 21 December 2034 bond tomorrow and A$700mn of the 2.75% 21 November 2029 bond on Friday.