Slightly Richer, Narrow Ranges Ahead Of FOMC Minutes

ACGBs (YM flat & XM +1.0) are slightly stronger after dealing in narrow ranges in today’s Asia-Pac session. With the local calendar empty, local participants have been content to sit on the sidelines ahead of the release of the May FOMC Minutes later today.

• Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest gains.
• Cash ACGBs are flat to 1bp richer, with the AU-US 10-year yield differential 2bps higher at -17bps.
• ACGBs have significantly outperformed their NZ counterparts, with the AU-NZ 10-year yield differential 7bps more negative, after the RBNZ delivered its policy decision. NZGBs closed 4-7bps cheaper. The 0.2pp overshoot of the RBNZ’s Q1 CPI forecast seemed to drive a hawkish shift. Rates may now need to stay restrictive for “longer than anticipated”. The RBNZ’s upward revision to its OCR path and the discussion of another hike reflect this. It said “rate cuts continue to be delayed”.
• Swap rates are flat.
• The bills strip is flat to -2.
• RBA-dated OIS pricing is flat to 1bps firmer across meetings. A cumulative 9bps of easing is priced by year-end.
• The local calendar will see Judo Bank Preliminary PMIs and Consumer Inflation Expectations data tomorrow.