US STOCKS: S&P(ESU5) - Moves Quickly To 6600 On Benign Inflation Data

The Australian Office of Financial Management (AOFM) will today sell A$1200mn of the 4.25% 21 December 2035 bond. The line was last sold on 9 July 2025 for A$1200mn. Bidding is likely to be shaped by several key factors: 

• The current outright yield is 5-10bps lower than the previous auction and approximately 50bps lower than the peak in late 2024.
• The 3/10 yield curve is around the same level as the previous auction but sits around 20bps below its recent high.
• On the negative side, the auction comes amid weaker sentiment toward longer-dated global bonds.
• However, the line is included in the XM basket.
• While some factors may limit the overall strength of bidding, there is an expectation of continued firm pricing at today's auction.
• Results are due at 0200 BST / 1100 AEST.

The Australian Office of Financial Management (AOFM) will today sell A$1200mn of the 4.25% 21 December 2035 bond. The line was last sold on 9 July 2025 for A$1200mn. The line was opened via syndication on 24 July 2024 for A$11.5bn. 

• The last sale drew an average yield of 4.3442%, at a high yield of 4.3475% and was covered 2.6500x. There were 29 bidders, 16 of which were successful and 12 were allocated in full. The amount allotted at the highest yield as a percentage of the amount bid at that yield was 3.5%.
• This week's ACGB supply is at the top of the recent average weekly issuance of $1500-2200mn, with A$1000mn of the 2.75% 21 November 2029 bond due on Friday.
• During the first half of 2025-26, the AOFM plans to: issue a new October 2036 Treasury Bond (by syndication and subject to market conditions); conduct 2 Treasury Bond tenders most weeks; hold 1-2 Treasury Indexed Bond tenders each month.
• Issuance of Treasury Bonds (including Green Treasury Bonds) in 2025-26 is expected to be around $150 billion. Issuance of Treasury Indexed Bonds in 2025-26 is expected to be between $2 billion and $3 billion. 
• Results are due at 0200 BST / 1100 AEST.

Japan's July PPI was close to expectations. The m/m outcome printed at +0.2%, in line with expectations, while the June outcome was revised to 0.1%m/m (originally reported as -0.2%). In y/y terms we printed at 2.6%, versus 2.5% forecast and 2.9% prior. 

• The chart below plots the headline PPI y/y, versus the National CPI, also in y/y terms. At face value it implies some further softening in y/y CPI momentum for July. Note that this print comes out on August 22nd.
• In terms of the detail, manufacturing was up 0.2%, while some commodities, most notably petroleum, coal, rose for the first time in a number of months (+1.8%).
• The data is unlikely to shift near term BoJ thinking around wait and see mode from a policy standpoint. 

Fig 1: Japan PPI & CPI, Y/Y 

Source: Bloomberg Finance L.P./MNI