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EUROZONE ISSUANCE

EGB Supply - W/C January 23, 2023

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Downtrend Intact

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(H3) Support Remains Intact

EUROZONE T-BILL ISSUANCE

W/C Jan 23, 2022

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Holding On To This Week’s Gains

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Above-Forecast CPI Report Applies Pressure To ACGB Space

AUSSIE BONDS

Cash ACGBs took a nosedive on the release of Australian Q3 CPI data, which came in stronger than expected. The RBA-sensitive 3-Year yield has reversed earlier losses, soaring into positive territory, and last sits at 3.570%. The curve still runs flatter, with yields last +1.5bp to -9.0bp, with 3-Year/10-Year spread extending losses.

  • Aussie bond futures have retreated as inflation data fanned hawkish RBA expectations, with YM last +1.0 & XM +9.5, with YMXM printing multi-week lows. Bills run 2-11 ticks lower through the reds.
  • Headline CPI accelerated to +1.8% Q/Q in the third quarter, beating consensus forecast of +1.6%. Trimmed mean CPI also rose faster than forecast, printing at +1.8% Y/Y, above the +1.5% median estimate. The annual increase in headline CPI was +7.3%, the fastest pace in 32 years.
  • The data seals the case for a 25bp hike to the cash rate target next week, with such move now fully priced by meeting-dated swaps, after the implied amount of tightening blipped higher in reaction to the inflation figures.

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