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Slightly Richer, US Tsys Slightly Richer, RBA Bullock Speech On Climate Change


ACGBs (YM +1.0 & XM +1.0) are slightly higher after US tsys kicked off the last week of a bearish month with a modest richening. US tsys finished the session 1-4bp richer after see-sawing off midmorning lows. Solid 2- and 5-year auction results helped extend Monday's gains. A light bull steepening was apparent.

  • Rate hike fears, a "higher for longer" policy stance and supply concerns have made August tough for US tsys. Nevertheless, with yields having climbed to 16-year highs and much of the threat from still-hawkish monetary policy priced in, short covering and dip buying emerged ahead of Friday's August employment report. JOLTS Job Openings are due later today.
  • Cash ACGBs opened 1-2bp richer, with the AU-US 10-year yield differential flat at -8bp.
  • Swap rates are 1-2bp lower.
  • The bills strip is basically unchanged.
  • RBA-dated OIS pricing is flat to 1bp softer across meetings. a 6% chance of a 25bp hike in September is priced, with terminal rate expectations at 4.21%.
  • Today the local calendar sees a speech from RBA Governor-Elect Bullock, titled “Climate Change and Central Bank”, ahead of the CPI Monthly for July tomorrow.

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