AUSTRALIA: Core Inflation Measures Converging As Moderate Towards Mid-Point

US President Trump has posted Truth Social, urging Republicans to pass the tax bill. He notes failure to pass it will result in a 68% tax increase. See below for the full post. 

"Republicans, the One Big Beautiful Bill, perhaps the greatest and most important of its kind in history, gives the largest Tax Cuts and Border Security ever, Jobs by the Millions, Military/Vets increases, and so much more. The failure to pass means a whopping 68% Tax increase, the largest in history!!!" 

The TYU5 range has been 112-00+ to 112-06+ during the Asia-Pacific session. It last changed hands at 112-06+, up 0-02+ from the previous close. 

• The US 2-year yield is slightly lower trading around 3.717%.
• The US 10-year yield has edged lower trading around 4.208%, down 0.02 from its close.
• This has seen the yield curve flatten in Asia - 2s10s -1.74 at 48.723, 5s30s -0.89 at 96.665.
• The 10-year yield has accelerated through its support, this should clear the way for a move lower with the 4.10% area the first target. 10-year yields should now find demand on any bounce back to the 4.35/40% area.
• (Bloomberg) - “Interest-rate strategists at Morgan Stanley recommended buying the December SOFR futures contract, as employment data to be released this week “carry more potential to reinforce” than to halt the shift in investor expectations “in the direction of multiple rate cuts in 2025.”
• Guy LeBas on X: “It's more reinforcement of old news than new news per se, but Bessent interview this AM aggressively rejected increasing coupon UST issuance.”
• “Goldman said the first rate cut may come in September, sooner than it had forecast.”(BBG)
• Data/Events:  S&P Global US Man PMI, Wards Total Vehicle Sale, ISM Manufacturing, Construction Spending, JOLTS, Dallas Fed Services Activity

The 10-year JGB auction delivered mixed to solid results, with the low price beating expectations at 100.40, according to the Bloomberg dealer poll. However, the cover ratio decreased slightly to 3.5070x from 3.6627x, and the tail lengthened to 0.03 from 0.01, albeit the shortest since March 2023.

• This performance came with an outright yield 5-10bps lower than last month and approximately 15bps below the recent cyclical high of 1.596% reached in late March.
• Moreover, the 2s/10s and 7s/10s yield curves had flattened slightly from last month.
• An improvement in investor sentiment toward longer-dated global bonds through June, after a sharp deterioration in May, may have supported the bid tone.
• Notably, today’s result comes after Governor Kazuo Ueda reaffirmed on June 20 that the BoJ would consider raising its benchmark interest rate if its economic outlook materialises.
• In early afternoon Tokyo trading, the cash 10-year JGB is 3bps richer from pre-auction levels, while JGB futures have gapped higher.