Slightly Mixed, Powell’s Remarks Deliver A Twist Steepening To US Curve

ACGBs (YM +2.0 & XM -0.5) are dealing slightly mixed after cash US tsys finished 6bps richer to 12bps cheaper across the major benchmarks, the curve twist-steepened pivoting on 5s.

• Remarks from Fed Chair Powell were the main driver of US tsys on Thursday. The front-end bid was driven by Powell noting that incoming data showed progress towards the dual mandate goals. The long end, however, focused on remarks that policy is not too tight right now.
• Fed Funds implied rates show just 1bp of tightening priced for Nov, building to a cumulative +10bp to a terminal 5.42% in January. It’s followed by 70bp of cuts to end-2024.
• The cash ACGB curve has bull-steepened, with yields flat to 2bps lower. The AU-US 10-year yield differential is 2bps lower at -20bps.
• Swap rates are 1-3bps lower, with the 3s10s curve steeper.
• The bills strip has flattened, with pricing -1 to +4.
• RBA-dated OIS pricing is flat to 5bps softer, with Dec’24 leading.
• (AFR) The RBA’s huge financial losses from its extraordinary pandemic stimulus measures have blown out to about $43 billion. (See link)
• Today, the local calendar is empty.
• Elsewhere, National CPI from Japan and Fedspeak from Dallas Fed President Logan headlines in Asia today.