CPI Still Well Shy Of Target, Despite Beat, Not As Strong As Seems

Aussie bond futures added to the early Sydney weakness on the back of the slightly stronger than expected round of domestic Q4 CPI prints, although most of the gains in the headline CPI readings were fuelled by mechanical moves (tax hikes and subsidy rollback) as opposed to demand-side matters, with all 3 of the major Y/Y metrics still some way shy of the magic 2.0% mark. This allowed the longer end to recover from worse levels of the day, with YM unch. and XM -3.0 at the close (cash trade played catch up on the back of Tuesday's local holiday).

• Elsewhere, NAB business confidence moderated, although the current conditions metric rose.
• Westpac's RBA watcher, Bill Evans, reiterated his view that the Bank will extend its bond purchase scheme by offering to buy A$100bn worth of ACGBs and semis for another 6 months (when the current round of purchases comes to an end), before scaling back to A$50bn over 6 months when the second A$100bn runs out, with another A$50bn set to come after that. Evans also reaffirmed his view that the YCC policy will need to be adjusted in early 2022.
• There is also talk of a new '32 deal from QTC, although we haven't seen confirmation of that ourselves.