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AUSSIE BONDS: Cheaper After A Directionless NY Session For US Tsys

AUSSIE BONDS
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ACGBs (YM -2.0 & XM -3.5) are cheaper after a directionless NY session ahead of the December CPI report and the start of the earnings season today. 

  • Tame PPI gave US tsys a bid but the market ranged either side of unchanged on the day and closed mixed with the curve steepening 3bps to 42 bps.
  • The focus turns to today's headline CPI inflation data for December.  Analysts are looking for core goods inflation between 0.2-0.3% M/M after it accelerated to 0.31% M/M in Nov for a 19-month high. That was the third consecutive monthly increase in core goods prices after sequential deflation in 14 of the previous 15 months.
  • Cash ACGBs are2-3bps cheaper with the AU-US 10-year yield differential at -15bps.
  • Swap rates are 3-4bps higher.
  • The bills strip -1 to -3, with a steepening bias.
  • RBA-dated OIS pricing is flat to 3bps firmer across meetings today. A 25bp rate cut is less than fully priced for April (98%) now, with the probability of a February cut at 66% (based on an effective cash rate of 4.34%).
  • Today, the local calendar is empty.
  • AOFM Bond issuance will issue A$800mn of the 3.50% 21 December 2034 bond today. A$700mn of the 2.75% 21 November 2027 bond will be sold on Friday. 
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ACGBs (YM -2.0 & XM -3.5) are cheaper after a directionless NY session ahead of the December CPI report and the start of the earnings season today. 

  • Tame PPI gave US tsys a bid but the market ranged either side of unchanged on the day and closed mixed with the curve steepening 3bps to 42 bps.
  • The focus turns to today's headline CPI inflation data for December.  Analysts are looking for core goods inflation between 0.2-0.3% M/M after it accelerated to 0.31% M/M in Nov for a 19-month high. That was the third consecutive monthly increase in core goods prices after sequential deflation in 14 of the previous 15 months.
  • Cash ACGBs are2-3bps cheaper with the AU-US 10-year yield differential at -15bps.
  • Swap rates are 3-4bps higher.
  • The bills strip -1 to -3, with a steepening bias.
  • RBA-dated OIS pricing is flat to 3bps firmer across meetings today. A 25bp rate cut is less than fully priced for April (98%) now, with the probability of a February cut at 66% (based on an effective cash rate of 4.34%).
  • Today, the local calendar is empty.
  • AOFM Bond issuance will issue A$800mn of the 3.50% 21 December 2034 bond today. A$700mn of the 2.75% 21 November 2027 bond will be sold on Friday.