AUSSIE BONDS: Edge Higher With US Tsys In Asia-Pac Trade
ACGBs are firmer (YM +6.0 & XM +6.0) at session highs after trading in a relatively tight range in the Sydney session. Without the economic calendar and domestic headlines light the market has been happy to trade in sympathy with Us tsys, which have marginally extended NY session gains. At the time of writing, 2- and 10-year US tsys yields are 1bp and 2bp lower, respectively.
- Cash ACGBs are 6-7bp richer with the AU-US 10-year yield differential -2bp at -5bp.
- Swap rates opened 4bp lower with EFPs 2bp wider.
- The bills strip has twist flattened with pricing -3 to +3.
- RBA dated OIS pricing is mixed with pricing 1bp firmer out to August and 1-4bp softer for meetings beyond. Year-end easing expectations sit at 25bp from an expected terminal rate of 3.92% (August).
- Chinese Foreign Minister Qin Gang is expected to visit Australia in July as diplomatic relations between the two trading partners stabilise, The South China Morning Post reported and an Australia academic said.
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CROSS ASSET: Asia Looks Ahead To U.S. CPI
A generally muted Asia-Pac session thus far when it comes to broader cross-asset gyrations, with regional participants looking ahead to the impending U.S. CPI print (see our full preview of that release here).
- That leaves U.S. Tsy yields unchanged across the curve, e-minis operating roughly in line with settlement, the broader USD marginally softer on the day (per the BBDXY) and benchmark oil futures consolidating yesterday’s gains.
- The only exceptions to the broader muted markets trend (at least across the major barometers) involve an uptick in precious metals, as spot gold extends higher on a break through yesterday’s high, and the Hang Seng, which trades on the defensive after opening at essentially unchanged levels.
US TSYS: Little Changed With CPI In View
Cash tsys remain little changed from yesterday's closing levels across the major benchmarks. Asia-Pac participants are perhaps sidelined with an eye on today's CPI print, little meaningful macro newsflow has crossed in today's Asian session. TYM3 deals at 115-14+, +0-02+, a narrow 0-02 range has been observed.
BOJ: Fixed Rate Purchase Offer
The BoJ offers to buy an unlimited amount of 5- to 10-Year JGBs at a fixed rate of 0.50%.
