Domestic matters drove activity this...>

AUSSIE BONDS: Domestic matters drove activity this week, with much weaker than

exp. inflation triggering a strong bid despite various holidays being observed.

Bills trade 16-19 ticks higher through the greens at writing, in w/w terms.

- The aforementioned domestic CPI print was a game changer, pressing domestic

3-Year yields to record lows, trading around a full 25bp through cash at one

point. The data also drove RBA rate cut re-pricing. OIS price a ~50% chance of a

cut in May, up from a mere 12% pre-release (but back from reaction highs). A

swathe of banks front-loaded their existing rate cut calls/joined the camp

calling for a cut, with some now looking for back to back cuts in May and June.

- The RBA continues to struggle with the trade-off of sub-target inflation and a

strong labour market, as outlined in the minutes of the most recent monetary

policy decision. The upcoming federal election also adds a political curve ball

to matters.

- Also worth highlighting that 1-, 3- & 6- month BBSW all registered fresh all

time lows this week.