Weaker, At Cheaps, RBA Minutes Tomorrow

ACGBs are weaker (YM -8.0 & XM -7.5), near session cheaps, after trading in a relatively narrow range for the Sydney session. Without meaningful economic data or headlines, the local market has traded in sympathy with US tsys, ahead of a heavy domestic calendar. US tsys are little changed in Asia-Pac trade, holding near cheaps seen in the NY session ahead of the weekend.

• Cash ACGBs are 7-8bp cheaper with the AU-US 10-year yield differential unchanged at -7bp.
• Swap rates are 7-8bp higher with the 3s10s curve flatter.
• The bills strip has bear steepened with pricing -5 to -11.
• RBA dated OIS are 2-9bp firmer across meetings with late ‘23/early ’24 leading. A 16% chance of a 25bp hike is priced for June. the expected terminal rate has moved back to 3.96%, just shy of the post-May hike high of 3.97%. The move higher in terminal rate expectations has been assisted by a firming in US STIR, which troughed ahead April non-farm payrolls.
• The local calendar heats up tomorrow with the release of RBA Minutes for May, ahead of Q1 Wage Price Index (Wed) and the April Employment (Thu).
• Further afield, the global calendar is light ahead of tomorrow’s data dump in China, the Euro Area's Q1 GDP and US Retail Sales.