Cheaper With A Tight Range

ACGBs are weaker (YM -11.0 & XM -11.0) ahead of the bell after trading in a relatively tight range in the Asia-Pac session. Once retail sales data printed at consensus and failed to provide a local driver, the market largely tracked movements in U.S. Tsys, which recouped a portion of NY session losses in Asia-Pac trade.

• Cash ACGBs are 10-11bp cheaper with the AU-US 10-year yield differential -2bp at -21bp.
• Swaps rates are 9-10bp higher with the 3s10s curve 1bp steeper and EFPs 1bp tighter.
• Bills strip pricing is -6 to -11 with reds leading.
• RBA dated OIS is 6-11bp firmer for meetings beyond May with expected year-end easing at 25bp.
• Locally, attention now shifts to the scheduled release of CPI Monthly for February tomorrow. BBG consensus is expecting another slowing in the Y/Y rate to 7.2% from 7.4% in January and 8.4% in December. It is important to note however that the series can be volatile from month to month given not all components are updated.
• With the global calendar relatively light until Friday when Euro Area CPI (Mar) and US PCE deflator (Feb) are released, the markets will be closely watching to see if the recent improvement in risk sentiment, and upward pressure on global yields, can extend further.