Slightly Stronger With US Tsys After Powell’s Mildly Dovish Comments, Retail Sales Due

ACGBs (YM +1.0 & XM +1.0) are little changed after US tsys reacted favourably to Fed Chair Powell’s comments at the ECB conference in Sintra. Powell stated recent inflation data suggested that "we are getting back on a disinflationary path", with the caveat that more is needed to be more confident that inflation is headed sustainably to 2% before loosening policy.

• The cash tsy curve flattened, with yields 1-3bps lower. The 10-year yield reached the session lows near 4.41% following Powell’s comments before rebounding on stronger-than-expected JOLTS data. JOLTS job openings printed 8.14mn vs. 7.946mn est, while prior was down revised to 7.919mn from 8.059mn.
• Judo Bank PMIs for June have printed: Composite Index fell to 50.7 from 52.1 in May, and Services Index fell to 51.2 from 52.5 in May.
• Cash ACGBs are 1bp richer, with the AU-US 10-year yield differential at -3bps.
• Swap rates are 1bp lower.
• The bills strip is little changed.
• RBA Dated OIS is little changed today. Pricing is currently 6-25bps firmer across meetings than pre-CPI levels. The market gives a 25bp hike in August a 44% chance. Terminal rate expectations are also dramatically firmer at 4.49% versus 4.37% before the CPI data.
• Today, the local calendar will also see Building Approvals and Retail Sales data alongside AOFM’s sale of A$600mn of 3.75% Apr-37 bond.