Cross-Market Matters At The Fore

Marginally softer than expected NZ CPI data provided an early Sydney bid (note that the +6.9% Y/Y reading still represented a multi-decade high, missing by 0.2ppt vs. BBG consensus), before the aforementioned weakness in U.S. Tsys dragged the space away from best levels, with the sell off accelerating as we move towards the last hour of Sydney dealing. The latest leg lower may have been aided by the uptick in the latest RBNZ sectoral factor inflation reading (+4.2% Y/Y vs. +3.8% in Q4), in what would have been a second round of trans-Tasman impetus observed during the session.

• That leaves YM -3.5 & XM +1.5, as the front end feels the brunt of the pressure and the curve twist flattens. 7s provided the pivot point in cash ACGB trade, with longer dated cash ACGBs running ~3bp richer at typing.
• The 3-/10-Year EFP box has steepened on the day.
• There wasn’t anything in the way of immediate reaction to the latest uptick in the 3-month BBSW fixing.
• Bills are 3-11 ticks lower through the reds, with weakness there accelerating as YM pulled lower.
• Prelim PMI data and the release of the weekly AOFM issuance slate will headline domestic matters on Friday.