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AUSSIE BONDS: Muted Reaction To Core CPI Increase

AUSSIE BONDS
BulletAPACFixed Income BulletsAustraliaMarkets

ACGBs (YM flat & XM +1.0) are slightly stronger, but 1-2bps cheaper after October’s CPI data. There was an initial spike richer, but that was quickly unwound. 

  • October CPI printed at 2.1%, lower than expected but in line with September. However, the trimmed mean, which is the focus of the RBA currently, increased to 3.5% from 3.2%. The first month of the quarter has limited updates for service components.
  • Cash US tsys are little changed in today’s Asia-Pac session.
  • Cash ACGBs are1bp cheaper on the day with the AU-US 10-year yield differential at +13bps.
  • Swap rates are 1bp lower.
  • The bills strip is -1 to +3, with a flattening bias.
  • RBA-dated OIS pricing is flat to 3bps softer across meetings, with the mid-2025 contracts leading the move.
  • After the data, a 25bps rate cut is not fully priced until July. It was May earlier.  
  • Notably, pricing for the May meeting is now 10bps softer than two weeks ago, when a full 25bps cut wasn't expected until August. 
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ACGBs (YM flat & XM +1.0) are slightly stronger, but 1-2bps cheaper after October’s CPI data. There was an initial spike richer, but that was quickly unwound. 

  • October CPI printed at 2.1%, lower than expected but in line with September. However, the trimmed mean, which is the focus of the RBA currently, increased to 3.5% from 3.2%. The first month of the quarter has limited updates for service components.
  • Cash US tsys are little changed in today’s Asia-Pac session.
  • Cash ACGBs are1bp cheaper on the day with the AU-US 10-year yield differential at +13bps.
  • Swap rates are 1bp lower.
  • The bills strip is -1 to +3, with a flattening bias.
  • RBA-dated OIS pricing is flat to 3bps softer across meetings, with the mid-2025 contracts leading the move.
  • After the data, a 25bps rate cut is not fully priced until July. It was May earlier.  
  • Notably, pricing for the May meeting is now 10bps softer than two weeks ago, when a full 25bps cut wasn't expected until August.