Slightly Richer Ahead Of CPI Monthly Data

ACGBs (YM +2.0 & XM +1.0) are slightly richer after US tsys finished with a mild twist-steepening of the 2/10 curve (4bps lower to 1bp higher) on a news flow light session.

• As measured by the Conference Board, US consumer confidence rose more than expected to a six-month high of 103.3, with the expectations component up to a one-year high.
• Today’s local calendar will see the week’s highlight in the form of July CPI Monthly data. 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. The moderation is expected to be driven by lower food inflation and an outright fall in petrol prices, as well as government cost-of-living measures.
• Q2 Construction Work Done is also due for release.
• Cash ACGBs are 1-2bps richer, with the AU-US 10-year yield differential at +8bps.
• Swap rates are 2bps lower.
• The bills strip has slightly bull-flattened, with pricing flat to +2.
• RBA-dated OIS pricing is little changed. A cumulative 25bps of easing is priced by year-end.
• Today, the AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond. On Friday, there is also a planned sale of A$700mn of the 2.75% 21 November 2029 bond.