Bear Flattening In Wake Of U.S. CPI, Futures Comfortably Off Overnight Lows

YM deals -11.0 & XM deals -4.0, with the former ticking lower in early Sydney trade and the latter little changed vs. late overnight levels as domestic participants react to Thursday’s wider price swings. Still, the contracts trade notably off of overnight lows (please see our recently published NZGB bullet for more colour on the drivers of the violent, two-way moves seen in overnight dealing).

• Wider cash ACGB trade sees the major benchmarks running 3-11bp cheaper, with pronounced bear flattening in play there, as the curve trades in sympathy with Thursday’s move in U.S. Tsys. The 3-/10-Year yield curve now deals just above 20bp, a little over 20bp off August lows.
• Bills run 7-12bp cheaper through the reds, with RBA dated OIS now indicating a terminal rate of ~4.05%, ~10bp above levels observed late on Thursday.
• Looking ahead, Friday will see A$700mn of ACGB Apr-27 supply and the release of the weekly AOFM issuance slate.
• Chinese trade balance & CPI data will also provide points of interest for the Asia-Pac region.