ACGB Curve Flattens, US CPI Later & AU Employment Data Thursday

ACGBs (YM -2.0 & XM 0.0) are mixed today, with the curve slightly flatter. Earlier, The Q1 wage price index rose a less-than-expected 0.8% q/q to be up 4.1% y/y, the third straight quarter above 4%. Q4 was revised up 0.1pp to 1.0% q/q. The focus will now turn to US CPI due out later tonight and more locally AU Employment data on Thursday.

• Cross-asset moves: US equity futures are little changed today, the ASX200 is up 0.50% to be a top performer in the region, while in the FX space, AUD and NZD were the top performing G10 currencies as they were supported by positive news from China around the property sector, Iron Ore is down 0.65% at $115.30/ton.
• Issuance: Australia sold A$800m 2.75% 2035 bonds at 4.3516% average yield for a bid/cover ratio of 2.9250x up from 2.8437x prior
• Front-end ACGBs are a touch weaker today as the curve bear-flattened, the 2y10y -1.520 at 28.940 with yields flat to 2bps higher, while the AU-US 10-year yield differential is 1bps lower, now -11bps
• Swap rates are 1-2bps lower
• The bills strip is 1bp lower
• RBA-dated OIS implied rate now pricing 1bps lower into the November meeting, market has softened a touch and is now pricing 7.5bps of easing into year-end to a terminal rate of 4.275%
• Looking ahead, Employment data is due out at 11.30 AEST on Thursday