Firmer & Flatter On Domestic CPI & China PMIs

Aussie bonds have firmed, with softer than expected domestic CPI data and weak official PMI prints out of China facilitating the bid.

• The richening in the long end extended into the close, even with sub-average projections for month-end index extensions noted, while YM was capped by its post-CPI Sydney peak.
• That left YM +7.0 at the close, while XM was +7.5. Cash ACGBs ran 6.5-10.5bp richer on the day, bull flattening, after the previously flagged data releases more than reversed the early bear steepening.
• The latest round of ACGB Apr-33 supply went well. The recent stabilisation of the space away from cycle cheaps and edging of the line towards 10-Year benchmark status likely aided takedown.
• Bills were 3-10bp richer through the reds, while RBA dated OIS nudged lower post-data. Just under 20bp of tightening is now priced for the Bank’s Dec ’22 meeting, while terminal cash rate pricing is in to ~3.75%.
• Looking ahead, Thursday’s local docket includes capex data, the final m’fing PMI survey from S&P Global and the CoreLogic house price print.