Weaker, Debt Ceiling Negotiations Continue, Fedspeak Mixed

ACGBs are weaker (YM -3.0 & XM -3.0) after US tsys finished NY trade 3-5bp cheaper across benchmarks.

• President Biden and House Speaker McCarthy will meet later this morning on debt ceiling negotiations.
• Fed Kashkari reiterated comments from the weekend that the June rate decision is a close call. Fed Bostic said he's comfortable waiting to see how the economy reacts to rate hikes before any more tightening, whilst Fed Bullard said he's thinking of two more rate hikes this year.
• Cash ACGBs opened 3bp cheaper with the AU-US 10-year yield differential-2bp at -10bp.
• Swap rates opened 3bp higher.
• The bills strip is steeper with pricing -1 to -6.
• RBA dated OIS opened 1-4bp firmer across meetings.
• A Treasury spokesperson revealed that a $1 billion surplus in 2025/26 is set to be announced in Victoria’s state budget today. This is $100 million higher than forecast in the pre-election budget update in November. (link)
• The local calendar is light today with the highlight being RBA Jacobs, Head of Domestic Markets, speaking at a Fixed Income Forum in Tokyo (0810 BST / 1710 AEST). PMI data is also scheduled for release.
• The AOFM plans to sell A$150mn of the 1.25% 21 August 2040 Indexed bond.